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ZENITH BANK PLCCONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014TOGETHER WITH DIRECTORS' AND AUDITOR'S REPORT

ZENITH BANK PLC

DIRECTORS,OFFICERS AND PROFESSIONAL ADVISERS

Directors

Mr.Jim Ovia, CON. Chairman

Sir Steve Omojafor Non-Executive Director

Mr.Babatunde Adejuwon Non-Executive Director

Alhaji Baba Tela Non-Executive Director/ Independent

Prof. Chukuka Enwemeka Non-Executive Director

Mr.Jeffrey Efeyini Non-Executive Director

Chief (Mrs) Chinyere Asika Non-Executive Director/ Independent

Dr Haruna Usman Sanusi Non-Executive Director/ Independent

Mr.Peter Amangbo Group Managing Director/CEO

Ms. Adaora Umeoji Executive Director

Mr.Ebenezer Onyeagwu Executive Director

Mr.Oladipo Olusola Executive Director

Company Secretary Michael Osilama Otu

Registered office Zenith Bank Plc

Zenith Heights

Plot 87, Ajose Adeogun Street

Victoria IslandLagos

Auditors KPMG Professional ServicesKPMG TowerBishop Aboyade Cole streetVictoria IslandLagos

Registrar and Transfer Office Veritas Registrars Limited (formerly Zenith Registrars Limited)

Plot 89 A, Ajose Adeogun Street

Victoria IslandLagos

1 Consolidated and Separate Financial Statements-31 December 2014

ZENITH BANK PLCNote Page Note Page

Directors' Report for the Year Ended 31 December 2014 38 Impairment charge for credit losses 89

Corporate Governance Report for the Year Ended 31 December 2014 89 Fee and commission income 89

Statement of Directors' Responsibilities 1810 Trading income 90

Report of the Audit Committee 1911 Other income 90

Independent Auditors' Report 2012 Operating expenses 90

Consolidated and Separate Statements of Profit or Loss and OtherComprehensive Income.

2213 Taxation 91

Consolidated and Separate Statement of Financial Position as at 31December 2014

2414 Discontinued operations 93

Consolidated and Separate Statements of Changes in Equity as at 31December 2014

2515 Earnings per share 93

Consolidated and Separate Statements of Cash Flows for the YearEnded 31 December 2014

2716 Cash and cash equivalents 94

Notes to the Consolidated and Separate Financial Statementsfor the Year Ended 31 December 2014

29. 17 Treasury bills 94

18 Assets pledged as collateral 94

1 General information 2919 Due from other banks 94

2(i) Change in accounting policies 2920 Derivative assets 95

2(ii) Significant accounting policies 3021 Loans and advances 95

2.1 Basis of preparation 3022 Investment securiies 100

2.2 New standards, interpretations and amendments to existing standardthat are not yet effective

3023a Investment in subsidiaries 101

2.3 Basis of consolidation 3223b Condensed financial statement 102

2.4 Translation of foreign currencies 3324 Investment in associates 106

2.5 Cash and cash equivalents 3325 Deferred tax assets 107

2.6 Financial instruments 3426 Other assets 108

2.7 Derivative instruments and hedge accounting 3627 Assets classified as held for sale 108

2.8 Impairment of financial assets 3728 Property and equipment 109

2.9 Impairment of non-financial assets 3829 Intangible assets 111

2.10 Property and equipment 3930 Customer's deposits 111

2.11 Intangible assets 4031 Other liabilities 111

2.12 Leases 4032 On lending facilities 112

2.13 Provisions 4133 Borrowings 113

2.14 Employee benefits 4134 Debt security issued 114

2.15 Share capital 4235 Liabilities classified as held for sale 114

2.16 Recognition of interest income and expense 4336 Derivatives liabilities 114

2.17 Fees, commissions and other income 4337 Share capital 115

2.18 Operating expense 4338 Share premium, retained earnings and other reserves 115

2.19 Current and deferred income tax 4439 Pension contribution 115

2.20 Earnings per share 4440 Personnel expenses 116

2.21 Segment reporting 4441 Group subsidiaries and related party transactions 117

2.22 Fiduciary activities 4442 Contingent liabilities and commitments 118

2.23 Discontinued operations 4543 Dividends per share 119

2.24 Non-current assets held-for-sale or distribution 4644 Cash and cash equivalents 119

3 Risk management 7845 Compliance with banking regulations 119

3.12 Sustainability report 8346 Events after reporting period 120

4 Critical accounting estimates and judgements 8647 Comparatives 120

5 Segment analysis 89 Value Added Statement 123

6 Interest and similar income 89Five Year Financial Summary 125

7 Interest and similar expense


ZENITH BANK PLC

Directors' Report for the Year Ended 31 December 2014

The directors have pleasure in submitting their report on the consolidated and separate financial statements of ZENITH BANKPLC for the year ended 31 December 2014.

1. Legal form

The Bank was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on 30May,1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commencedbusiness on 16 June 1990. The Bank was converted into a Public Limited Liability Company on 20 May 2004. The Bank’sshares were listed on the 21 October 2004 on the floor of the Nigerian Stock Exchange.

There have been no material changes to the nature of the group's business from the prior year.

2. Principal activities and business review

The principal activity of the Bank is the provision of banking and other financial services to corporate and individual customers.Such services include granting of loans and advances, corporate finance and money market activities.

The Bank has five subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pension Custodian Limited, Zenith Bank(UK) Limited, Zenith Bank (Sierra Leone) Limited, and Zenith Bank (Gambia) Limited. In line with regulatory directives on thescope of banking operations in Nigeria, the Bank has concluded the divestment from its non-core banking operations(excluding Zenith Pension Custodian Limited). During the year, the Group opened seven new branches, six in Nigeria, and onein The Gambia. No branch was closed during year.

3. Operating results

Gross earnings of the Group increased by 14.76% and profit before tax increased by 8.3% respectively. Highlights of theGroup’s operating results for the year under review are as follows:

2014N'million

2013N' Million

Profit before tax 119,796 110,597Minimum tax - (2,663)Income tax (20,341) (12,616)Profit after taxation

99,455 95,318Non- controlling interest (180) (742)

Profit attributable to the equity holders of the parent 99,275 94,576

AppropriationsTransfer to statutory reserve 13,872 12,563Transfer to retained earnings and other reserves 85,403 82,013

99,275 94,576

Basic and Diluted earnings per share (kobo) 316 301Non-performing loan ratio % 1.8 3.0

4. Dividends

The Board of Directors, pursuant to the powers vested in it by the provisions of section 379 of the Companies and AlliedMatters Act (CAMA) of Nigeria, proposed a dividend of N1.75 kobo per share (31 December 2013: N1.75 kobo per share) fromthe retained earnings account as at 31 December 2014. This is subject to approval by shareholders at the next Annual GeneralMeeting.

If the proposed dividend is approved by the shareholders, the Bank will be liable to pay additional corporate tax estimated atN16.48 billion, which represents the difference between the tax liability calculated at 30% of the dividend approved and theminimum tax charge reported in the statement of profit or loss and other comprehensive income for year ended 31 December2014.

Payment of dividends is subject to withholding tax at a rate of 10% in the hand of recipients.


ZENITH BANK PLC


5. Directors' shareholding

The direct interests of directors in the issued share capital of Zenith Bank Plc as recorded in the register of directorsshareholding and/or as notified by the directors for the purposes of sections 275 and 276 of the Companies and Allied MattersAct and the listing requirements of the Nigerian Stock Exchange is as follows:

Number of ShareholdingDirector Designation 2014 2013Mr.Jim Ovia, CON. Chairman 2,946,199,395 2,946,199,395Mr.Peter Amangbo Group Managing Director / CEO 5,000,000 5,000,000Sir Steve Omojafor Non Executive Director 4,466,036 4,466,036Mr.Babatunde Adejuwon Non Executive Director 3,752,853 3,752,853Alhaji Baba Tela Non Executive Director / Independent 250,880 250,880Dr Haruna Usman Sanusi Non-Executive Director / Independent - -Prof. Chukuka Enwemeka Non-Executive Director 127,137 127,137Mr.Jeffrey Efeyini Non-Executive Director 541,690 197,400Chief (Mrs) Chinyere Asika Non-Executive Director / Independent 95,757 95,757Ms. Adaora Umeoji Executive Director 23,620,141 20,035,604Mr.Ebenezer Onyeagwu Executive Director 2,000,000 2,000,000Mr.Oladipo Olusola Executive Director 1,877,600 -

6. Directors' interests in contracts

For the purpose of section 277 of the Companies and Allied Matters Act, none of the existing directors had direct or indirectinterest in contracts or proposed contracts with the Bank during the year.

7. Acquisition of own shares

The shares of the Bank are held in accordance with the Articles of Association of the Bank. The Bank has no beneficial interestin any of its shares.

8. Property and equipment

Information relating to changes in property and equipment is given in Note 27 to the financial statements. In the opinion of thedirectors, the market value of the Group’s properties is not less than the value shown in the financial statements.

9. Shareholding analysis

The shareholding pattern of the Bank as at 31 December, 2014 is as stated below:

Share range No. ofShareholders

Percentage ofShareholders

Number ofholdings

PercentageHoldings (%)

1-9, 999 543,289 %83.5340 1,648,448,849 %5.2510,000 - 50,000 85,238 %13.1058 1,741,932,851 %5.5550,001 - 1,000,000 20,824 %3.2018 3,134,187,886 %9.981,000,001 - 5,000,000 736 %0.1132 1,544,809,379 %4.925,000,001 - 10,000,000 125 %0.0192 858,481,233 %2.7310,000,001 - 50,000,000 107 %0.0165 2,302,183,124 %7.3350,000,001 - 100,000,000 26 %0.0040 1,805,880,013 %5.75100,000,001 - 500,000,000 28 %0.0043 5,742,873,132 %18.29500,000,001 - 1,000,000,000 3 %0.0005 1,928,683,683 %6.14Above 1,000,000,000 5 %0.0007 10,689,013,636 %34.06

650,381 %100 31,396,493,786 %100


ZENITH BANK PLC


The shareholding pattern of the Bank as at 31 December 2013 is as stated below:

Share range No. ofShareholders

Percentage ofShareholders

Number ofholdings

PercentageHoldings (%)

1-9, 999 547,119 %83.1254 1,676,928,030 %5.3410,000 - 50,000 88,210 %13.4020 1,809,701,360 %5.7650,001 - 1,000,000 21,758 %3.3058 3,284,733,586 %10.461,000,001 - 5,000,000 782 %0.1188 1,640,586,902 %5.235,000,001 - 10,000,000 132 %0.0201 913,513,381 %2.9110,00,001 - 50,00,000 125 %0.0190 2,578,251,111 %8.2150,00,001 - 100,000,000 28 %0.0043 2,095,421,405 %6.67100,000,001 - 500,000,000 23 %0.0035 4,723,471,330 %15.04500,000,001 - 1,000,000,000 3 %0.0005 1,845,907,290 %5.88Above 1,000,000,000 5 %0.0008 10,827,979,391 %34.50

658,185 %100 31,396,493,786 %100

10. Substantial interest in shares

According to the register of members at 31 December 2014, the following shareholders held more than 5.0% of the issuedshare capital of the Bank.

Number ofShares Held

PercentageHoldings%

Jim Ovia, CON 2,946,199,395 %9.38Stanbic Nominees Nigeria Limited/C001 - TRAD 2,134,940,725 %6.80Stanbic Nominees Nigeria Limited/C002 - TRAD 2,975,554,502 %9.48

According to the register of members at 31 December 2013, the following shareholders held more than 5.0% of the issuedshare capital of the Bank.

Number ofShares Held

PercentageHoldings%

Jim Ovia, CON 2,946,199,395 %9.38Stanbic Nominees Nigeria Limited/C001 - TRAD 2,901,359,725 %9.24Stanbic Nominees Nigeria Limited/C002 - TRAD 2,353,437,304 %7.50

11. Donations and charitable gifts

The Group made contributions to charitable and non-political organisations amounting to N 1,102 million during the 2014financial year.

The beneficiaries are as follows:

2014N'million

Fund Support for Victims of terrorism 250ICT Centres nationwide 180Security Trust Funds 100Delta State Sports Commission 60Nigerian Economic Summit Group 40Nigerian Basketball Association 35Veritas University of Nigeria 20St. Saviour School Ikoyi 20Loyola Jesuit University Project 10Kogi State Polytechnic Lokoja 13Open National Sports Festival 10Lagos Economic Summit Group 10Others below N10 million 354

1,102


ZENITH BANK PLC


The Group made contributions to charitable and non-political organisations amounting to N 856 million during the 2013financial year.

The beneficiaries are as follows:

2013N'million

Federal Government Flood Disaster Fund 300Delta State ICT Centre 62Lagos State Security Trust Fund 50Delta State Football Association 26Day Waterman College Indigent Student Scholarship Fund 20African Youth Athletics Championship 20Edo State Security Fund 20Jesuit Fathers of Nigeria Youth Development 20Government Science Secondary School -Kuru Jos Plateau State 15Musical Society of Nigeria 9Adamawa State Windstorm Disaster Relief Fund 5Project 52 Mobile Health Center 5Others below N5 million 304

856

12. Events after the reporting period

There were no significant events after the balance sheet date that could affect the reported amount of assets and liabilities asof the balance sheet date.

13. Human resources

i) Employment of disabled persons.

The Group continues to maintain a policy of giving fair consideration to the application for employment made by disabledpersons with due regard to their abilities and aptitude. The Group’s policy prohibits discrimination against disabled persons inthe recruitment, training and career development of its employees. In the event of members of staff becoming disabled, effortswill be made to ensure that their employment continues and appropriate training arranged to ensure that they fit into theGroup's working environment.

ii) Health, safety and welfare at work.

The Group enforces strict health and safety rules and practices at the work environment, which are reviewed and testedregularly. The Group retains top-class private hospitals where medical facilities are provided for staff and their immediatefamilies at the Group’s expense.

Fire prevention and fire-fighting equipment are installed in strategic locations within the Group’s premises, while occassionalfire drills are conducted to create awareness amongst staff.

The Group operates both a Group Personal Accident and the Workmen’s Compensation Insurance covers for the benefit of itsemployees. It also operates a contributory pension plan in line with the Pension Reform Act.

iii) Employee training and development.

The Group ensures, through various fora, that employees are informed on matters concerning them. Formal and informalchannels are also employed in communication with employees with an appropriate two-way feedback mechanism.

In accordance with the Group’s policy of continuous development, training facilities are provided in our well-equipped trainingcentres. In addition, employees of the Bank are nominated to attend both locally and internationally organized courses. Theseare complemented by on-the-job training.


ZENITH BANK PLC

Corporate Governance Report for the Year Ended 31 December 2014

1. Introduction

The Bank’s corporate governance practices are in accordance with international best practice and standards. This ensures thatour business is conducted in a manner that is not only transparent but meets the expectation of all stakeholders. The Bankconstantly reappraises its corporate governance mechanisms to ensure that it meets the highest ethical standards at all times.

2. Shareholding

The Bank has a diverse shareholding structure with no single ultimate individual beneficiary holding more than 9.5% of thebank’s total shares.

3. Board of directors

The tone of Corporate Governance is set at the Board level. The Board has the overall responsibility for setting the strategicdirection of the Bank and also oversight of senior Management.

The Board comprises of individuals who satisfy the criteria for the position and possesses the competence necessary tounderstand properly and deal with the current and emerging issues of the business of the Bank.

The Board consists of persons of mixed skills, chosen on the basis of professional background and expertise, businessexperience and integrity as well as knowledge of the Bank’s business.

Directors are fully aware of their responsibilities and are also able to exercise good judgment on issues relating to the Bank’sbusiness.

4. Board structure

The board is made up of a non-executive Chairman, seven (7) non-executive Directors and four (4) Executive Directorsincluding the GMD/CEO. Three (3) of the Non-Executive Directors are independent directors, appointed in compliance with theCentral Bank of Nigeria (CBN) circular on Appointment of Independent Directors by Banks.

The Managing Director/Chief Executive is responsible for the day to day running of the Bank, assisted by the ExecutiveCommittee (EXCO). EXCO comprises the Executive Directors and the Group Managing Director/Chief Executive, who chairs it.

5. Responsibilities of the board

The Board is responsible for:

reviewing and approving the bank’s strategic plans for implementation by management;

reviewing and approving the bank’s financial objectives, business plans and budgets, including capital allocations and

expenditures;

monitoring corporate performance against the strategic plans and business, operating and capital budgets;

implementing the bank’s succession planning;

approving acquisitions and divestitures of business operations, strategic investments and alliances, and major

business development initiatives;

providing oversight of senior management;

approving delegation of authority for any unbudgeted expenditure; and

assessing its own effectiveness in fulfilling its responsibilities, including monitoring the effectiveness of individual

directors.


ZENITH BANK PLC


The membership of the Board during the year is as follows:

Board of Directors

NAME POSITION

Jim Ovia, CON Chairman*Sir. Steve Omojafor Non Executive Director**Babatunde Adejuwon Non Executive DirectorAlhaji Baba Tela Non Executive Director / IndependentJeffrey Efeyini Non Executive DirectorProf. Chukuka S. Enwemeka Non Executive DirectorChief (Mrs) Chinyere Asika Non Executive Director / IndependentDr. Haruna Usman Sanusi Non Executive Director / IndependentPeter Amangbo Group Managing Director / Chief Executive Officer***Godwin Emefiele Past Group Managing Director / Chief Executive Officer****Ms. Adaora Umeoji Executive DirectorEbenezer Onyeagwu Executive DirectorOlusola Oladipo Executive Director *****

* Appointed by the Board on April 2, 2014 as NED/Chairman and approved by the Central Bank of Nigeria (CBN) on June 12,2014.

** Resigned as Chairman with effect from June 16, 2014.

*** Appointed by the Board on March 31, 2014 and approved by the Central Bank of Nigeria (CBN) on April 17, 2014.

**** Retired from the Board with effect from May 30, 2014.

***** Appointed by the Board on March 31, 2014 and approved by the Central Bank of Nigeria (CBN) on April 17, 2014.

The Board meets at least every quarter but may hold extra-ordinary sessions to address urgent matters requiring the attentionof the Board.

6. Board committee

The Board carries out its oversight functions using its various Board committees. This makes for efficiency and allows for adeeper attention to specific matters for the Board.

Membership of the committees of the Board is intended to make the best use of the skills and experience of non-executivedirectors in particular.

The Board has established the various committees with well defined terms of reference and Charters defining their scope ofresponsibilities in such a way as to avoid overlap or duplication of functions.

The committees of the Board meet quarterly but may hold extraordinary sessions as the business of the bank demands.

The following are the current standing Committees of the Board:

6.1 Board credit committee

The committee is currently made up of six (6) members comprising three (3) non Executive Directors and three (3) ExecutiveDirectors of the bank. The Board credit committee is chaired by a non-Executive Director who is well versed in credit matters.The Committee considers loan applications above the level of Management credit committee. It also determines the creditpolicy of the bank or changes therein.

The membership of the Committee is as follows:Jeffrey Efeyini – (Chairman)Babatunde AdejuwonAlhaji Baba TelaEbenezer OnyeagwuOlusola Oladipo *


ZENITH BANK PLC


Peter AmangboGodwin Emefiele**

(*) - Appointed to the Committee on July 17, 2014.

(**) - Retired from the Board with effect from May 30, 2014.

Committee’s terms of reference

To conduct a quarterly review of all collateral securities for Board consideration and approval; To recommend criteria by which the Board of Directors can evaluate the credit facilities presented from various

customers; To review the credit portfolio of the Bank; To approve all credit facilities above Management approval limit; To establish and periodically review the bank’s credit policy and portfolio in order to align organizational strategies,

goals and performance; To evaluate on an annual basis the components of total credit facilities as well as market competitive data and other

factors as deemed appropriate, and to determine the credit level based upon this evaluation; To make recommendations to the Board of Directors with respect to credit facilities based upon performance, market

competitive data, and other factors as deemed appropriate; To recommend to the Board of Directors, as appropriate, new credit proposals, restructure plans, and amendments

to existing plans; To recommend non-performing credits for write-off by the Board; and To perform such other duties and responsibilities as the Board of Directors may assign from time to time;

6.2 Staff matters, finance and general purpose committee

This Committee is made up of six (6) members: four (4) Non Executive Directors and two (2) Executive Directors. It is chairedby a non executive Director. The committee considers large scale procurement by the Bank, as well as matters bordering onstaff welfare, discipline, staff remuneration and promotion.

The membership of the committee is as follows:Alhaji Baba Tela – (Chairman))Chief (Mrs) Chinyere AsikaProf. Chukuka EnwemekaSir. Steve Omojafor *Ms. Adaora UmeojiPeter AmangboGodwin Emefiele (**)

(*) - Appointed as a Committee member on July 17, 2014(**) - Retired from the Board with effect from May 30, 2014

Terms of Reference Approval of large scale procurements by the bank and other items of major expenditure by the bank; Recommendation of the Bank’s Capital Expenditure (CAPEX) and major Operating Expenditure (OPEX) limits for

consideration by the Board; Consideration of management requests for branch set up and other business locations; Consideration of management request for establishment of offshore subsidiaries and other offshore business

offices. Consideration of the dividend policy of the Group and the declaration of dividends or other forms of distributions and

recommendation to the Board; Consideration of Capital expenditures, divestments, acquisitions, joint ventures and other investments, and other

major capital transactions; Review and approval of any employment-related contracts with the GMD/CEO and other executive officers, if

applicable; Consideration of senior management promotions as recommended by the GMD/CEO; Review and recommendations on recruitment, promotion, and disciplinary actions for senior management staff; Review and agreement at the beginning of the year, of the key performance indicators for the Group MD and

Executive Directors; Review and ratification of the performance appraisal of the Executive Directors as presented by the Group MD;


ZENITH BANK PLC


Review and agree the criteria for the performance review of the subsidiary companies Board of Directors andsubsidiary companies Managing Director;

Ensure annual review or appraisal of the performance of the Board is conducted. This review/appraisal covers allaspects of the Board’s structure, composition, responsibilities, individual competencies, Board operations, Board’srole in strategy setting, oversight over corporate culture, monitoring 9 role and evaluation of managementperformance and stewardship towards shareholders etc;

To discharge the Board’s responsibility relating to oversight of the management of the health and welfare plans thatcover the company’s employees.

6.3 Board risk and audit committee:

The former Risk management committee was rechristened as Board risk and Audit committee in July 2014 in line with the newCBN Code of Corporate Governance for Banks in Nigeria.

The Board risk and audit committee has oversight responsibility for the overall risk assessment of various areas of the Bank’soperations and compliance.

The Chief Risk Officer, the Chief Inspector and the Chief Compliance Officer have access to this committee and make quarterlypresentations for the consideration of the committee. Chaired by Mr. Adejuwon (a non executive Director), the committee’smembership comprises the following:

Babatunde Adejuwon – (Chairman)Jeffrey EfeyiniDr. Haruna Usman SanusiProf. Chukuka EnwemekaEbenezer Onyeagwu *Peter Amangbo *Godwin Emefiele (**)

* - Appointed Committee member on July 17, 2014.(**) – Retired from the Board with effect from May 30, 2014.

Terms of Reference

The primary responsibility of the Committee is to ensure that sound policies, procedures and practices are in place for

the risk-wide management of the bank’s material risks and to report the results of the Committee’s activities to the

Board of Directors.

Design and implement risk management practices, specifically provide ongoing guidance and support for the

refinement of the overall risk management framework and ensuring that best practices are incorporated;

Ensure that management understands and accepts its responsibility for identifying, assessing and managing risk;

Ensure and monitor risk management practices, specifically determine which enterprise risks are most significant and

approve resource allocation for risk monitoring and improvement activities, assign risk owners and approve action

plans;

Periodically review and monitor risk mitigation process and periodically review and report to the Board of Directors:(a) the magnitude of all material business risks;(b) the processes, procedures and controls in place to manage material risks; and(c) the overall effectiveness of the risk management process;

Facilitate the development of a comprehensive risk management framework for the Bank and develop the risk

management policies and processes and enforce its compliance.

To review the findings on management matters (Management Letter) to ensure that issues raised therein are

addressed in a timely manner.

To develop a comprehensive internal control framework for the bank and obtain assurances on the operating

effectiveness of the Bank’s internal control framework.


ZENITH BANK PLC


To work with the Internal Auditor to develop the Internal Audit Plan for the year annually and ensure that the internal

audit function is adequately resourced to carry out the plan.

To review periodically the Internal Audit progress against plan for the period and review outstanding agreed actions

and follow up.

To perform such other duties and responsibilities as the Board of Directors may assign from time to time.

6.4 Board governance, nominations and remuneration committee:

This Committee was established in July 2014 in line with the new CBN Code of Corporate Governance for Banks in Nigeria.

The Committee is made up of four (4) non Executive Directors. It is chaired by a non-executive Director.

Membership of the committee is as follows:S/N NAME1 Sir Steve Omojafor- (Chairman);2 Chief (Mrs) Chinyere Asika;3 Prof. Chukuka Enwemeka; and4 Alhaji Baba Tela.

Committee’s Terms of Reference To determine a fair, reasonable and competitive compensation practice for executive officers and other key

employees of the bank which are consistent with the bank’s objectives. Determining the quantum and structure of compensation and benefits for Non-Executive Directors, Executive

Directors and senior management of the Group; Ensuring the existence of an appropriate remuneration policy and philosophy for Executive Directors, Non-Executive

Directors and staff of the Group; Review and recommend to the Board, salary revisions and service conditions for senior management staff, based on

the recommendation of the Executives; Review and recommend for Board ratification, all terminal compensation arrangements for Directors and senior

management; To oversee broad-based employee compensation policies and programs; To recommend of appropriate compensation for Non-Executive Directors for Board and Annual General Meeting

consideration; To review and approve any recommended compensation actions for the Company's Executive Committee members,

including base salary, annual incentive bonus, long-term incentive awards, severance benefits, and perquisites; To review and continuously assess the size and composition of the Board and Board Committees, and recommend

the appropriate Board structure, size, age, skills, competencies, composition, knowledge, experience andbackground in line with needs of the Group and diversity required to fully discharge the Board’s duties;

To recommend membership criteria for the Group Board, Board Committees and subsidiary companies. To identify, at the request of the Board, specific individuals for nomination to the Group and subsidiary companies

Boards and to make recommendations on the appointment and election of New Directors (including the Group MD)to the Board, in line with the Group’s approved Director Selection criteria;

To review the effectiveness of the process for the selection and removal of Directors and to make recommendationswhere appropriate;

To ensure that there is an approved training policy for Directors, and to monitor compliance with the policy; To review and make recommendations on the Group’s succession plan for Directors and other senior management

staff for the consideration of the Board; To regularly monitor compliance with Group’s code of ethics and business conduct for Directors and staff; and To review the Group’s organization structure and to make recommendations to the Board for approval.

6.5 Audit committee

The committee is established in line with Section 359(6) of the Companies and Allied Matters Act, 1990. The committee’smembership consists of three (3) representatives of the shareholders elected at the Annual General Meeting (AGM) and three(3) non-executive Directors. The committee meets every quarter, but could also meet at any other time, if the need arises.


ZENITH BANK PLC


The membership of the Committee is as follows:

Shareholders' Representative

Alhaji Hamis B. Musa – (Chairman)Michael Olusoji AjayiMs. Angela Agidi

Non Executive DirectorsBabatunde AdejuwonChief (Mrs) Chinyere AsikaJeffrey Efeyini

Committee’s terms of reference

To meet with the Independent Auditors, Chief Financial Officer, Internal Auditor and any other Bank executive both

individually and/or together, as the committee deems appropriate at such times as the Committee shall determine to

discuss and review:

To prepare the Committee's report for inclusion of the following in the Bank's annual report.

(a) the Bank's quarterly and audited annual financial statements, including any related notes, the Bank's specificdisclosures and discussion under Management's Controls Report and the independent auditor's report, in advance ofpublication;

(b) the performance and results of the external and internal audits, including the independent auditor's management letter,and management's responses thereto;

(c) the effectiveness of the Bank's system of internal controls, including computerized information systems and security;any recommendations by the independent auditor and internal auditor regarding internal control issues and anyactions taken in response thereto; and, the internal control certification and attestation required to be made inconnection with the Bank's quarterly and annual financial reports; and

(d) such other matters in connection with overseeing the financial reporting process and the maintenance of internalcontrols as the committee shall deem appropriate.

To report to the entire Board at such times as the committee shall determine.

6.6 Executive committee (EXCO)

The EXCO comprises of the Managing Director, who chairs it and all Executive Directors. The committee meets twice weekly(or such other times as business exigency may require) to deliberate and take policy decisions on the effective and efficientmanagement of the bank. It also serves as a processing unit for issues to be discussed at the Board level. EXCO’s primaryresponsibility is to ensure the implementation of strategies approved by the Board, provide leadership to the Management teamand ensure efficient deployment and management of the Bank’s resources.Its Chairman is responsible for the day-to-dayrunning and performance of the Bank.

6.7 Other committees

In addition to the afore-mentioned committees, the Bank has in place, other standing management committees. They include:.(a) Management committee (MANCO);(b) Assets and liabilities committee (ALCO);(c) Management global credit committee (MGCC);(d) Risk management committee (RMC)(e) Information Technology (IT) steering committee


ZENITH BANK PLC


(a) Management committee

The management committee comprises the senior management of the Bank and has been established to identify, analyse, andmake recommendations on risks arising from day-to-day activities. They also ensure that risk limits as contained in the Boardand Regulatory policies are complied with. Members of the management committee make contributions to the respective Boardcommittees and also ensure that recommendations of the Board Committees are effectively and efficiently implemented. Theymeet weekly and as frequently as the need arises.

(b) Assets and liabilities committee (ALCO)

The ALCO is responsible for the management of a variety of risks arising from the Bank's business including market andliquidity risk management, loan to deposit ratio analysis, cost of funds analysis, establishing guidelines for pricing on depositand credit facilities, exchange rate risks analysis, balance sheet structuring, regulatory considerations and monitoring of thestatus of implemented assets and liability strategies. The members of the Committee include the Managing Director, ExecutiveDirectors, the Treasurer, the Head of Financial Control, the Head of Risk Management Group and a representative of theAssets and Liability Management Unit. The representative of the Asset and Liability Management Department serves as thesecretary of this Committee.

(c) Management global credit committee (MGCC)

The Management global credit committee is responsible for ensuring that the Bank complies with the credit policy guide asestablished by the Board. The committee also makes contributions to the Board credit committee. The committee can approvecredit facilities to individual obligors not exceeding in aggregate a sum as pre-determined by the Board from time to time. TheCommittee is responsible for reviewing and approving extensions of credit, including one-obligor commitments that exceed anamount as may be determined by the Board. The committee reviews the entire credit portfolio of the Bank and conductsperiodic assessment of the quality of risk assets in the Bank. It also ensures that adequate monitoring of performance is carriedout. The secretary of the committee is the Head of the Credit Administration Department.

The committee meets weekly or fortnightly depending on the number of credit applications to be considered. The members ofthe committee include the Managing Director, and all divisional and group heads, including the Executive Directors.

(d) Risk management committee

This committee is responsible for regular analysis and consideration of risks other than credit risk in the Bank. It meets (at leastmonthly or as the need arises) to review environmental and other risk issues and policies affecting the Bank and recommendsteps to be taken. The committee's approach is entirely risk based. The committee makes contributions to the Board riskmanagement committee and also ensures that the Board risk committee's decisions and policies are implemented. Themembers of the committee include the Managing Director, two Executive Directors and all divisional and group heads.

(e) Information Technology steering committee

The Information Technology steering committee is responsible for amongst others, development of corporate informationtechnology (IT) strategies and plans that ensure cost effective application and management of resources throughout theorganization.

Membership of the committee is as follows:1 The Managing Director/Chief Executive;2 Two (2) Executive Directors;3 Head of Treasury;4 Head of Trade Services;5 Marketing Groups Representatives;6 Chief Inspector;7 Chief Risk Officer;8 Head of IT;9 Head of Infotech - Software;10 Head of Infotech - Enginering;11 Head of Card Services;12 Group Head of Operations;13 Group Head of IT Audit;14 Head of e-Business; and15 Head of Investigation.

The committee meets monthly or as the need arises.


ZENITH BANK PLC


Relationship with Shareholders

Zenith Bank Plc maintains an effective communication with its shareholders, which enables them understand our business,financial condition and operating performance and trends. Apart from our annual report and accounts, proxy statements andformal shareholders’ meetings, we maintain a rich website (with suggestion boxes) that provide information on a wide range ofissues for all stakeholders.

Also, a quarterly publication of the bank and group performance is made in line with the disclosure requirements of the NigeriaStock Exchange.

The Bank has an Investors Relations Unit which holds regular forum to brief all stakeholders on operations of the bank.

The Bank also, from time to time, holds briefing sessions with market operators (stockbrokers, dealers, institutional investors,issuing houses, stock analysts, mainly through investors conference) to update them with the state of our business. Theseprofessionals, as advisers and purveyors of information, relate with and relay to the shareholders useful information about us.We also regularly brief the regulatory authorities, and file statutory returns which are usually accessible to the shareholders.

Below is a schedule of attendance at meetings for the past financial year.

BOARD AND BOARD COMMITTEES MEETINGS

The table below shows the frequency of meetings of the Board of Directors, Board committees and members’ attendance atthese meetings during the year under review.

Directors Board BoardCreditCommitte

Finance & GeneralPurpose Committe

Risk ManagementCommittee

BoardGovernance,Nominationand RemunerationCommittee

Number of Meetings 4 4 4 4 1AttendanceMr. Jim Ovia, CON* 2 N/A N/A N/A N/ASir Steve Omojafor** 4 N/A 1 N/A 1Mr Babatunde Adejuwon 4 4 N/A 4 N/AAlhaji Baba Tela 4 4 4 N/A 1Mr. Jeffrey Efeyini 4 4 N/A 4 N/AProf. Chukuka S.Enwemeka 3 N/A 3 3 1Chief (Mrs) Chinyere Asika 4 N/A 4 N/A 1Dr. Haruna Usman Sanusi 4 N/A N/A 4 N/AMr. Peter Amangbo*** 4 4 4 1 N/AMs. Adaora Umeoji 4 N/A 4 N/A N/AMr. Ebenezer Onyeagwu 4 4 N/A 4 N/AMr. Olusola Oladipo**** 2 2 N/A N/A N/AMr. Godwin Emefiele***** 2 2 2 2 N/A

Note:

* - Appointed by the Board on April 2, 2014 as NED/Chairman and approved by the Central Bank of Nigeria (CBN) on June 12,2014.

** – Resigned as Chairman with effect from June 16, 2014.

*** – Appointed by the Board on March 31, 2014 as GMD/CEO with effect from June 1, 2014 and as member of Board Riskand Audit Committee on July 17, 2014.

**** – Appointed by the Board on March 31, 2014 as Executive Director and approved by the Central Bank of Nigeria (CBN) onApril 17, 2014.

***** – Retired from the Board with effect from May 30, 2014.


ZENITH BANK PLC


N/A - Not Applicable (Not a Committee member).

Board Meetings Board CreditCommitteeMeeting

Finance andGeneral PurposeCommittee

Board Audit andCommittee Meeting

Board Governance,Nominations andRemunerationCommittee

Audit CommitteeMeeting of the Bank

February 12, 2014 February 11, 2014 February 11, 2014 February 11, 2014 N/A February 11, 2014

April 2, 2014 April 1, 2014 April 1, 2014 April 1, 2014 N/A April 1, 2014

July 17, 2014 July 16, 2014 July 16, 2014 July 16, 2014 N/A July 16, 2014

October 15, 2014 October 13, 2014 October 13, 2014 October 13, 2014 October 13, 2014 October 13, 2014

The Board Governance, Nominations and Remuneration Committee was constituted in the second half of the year, andtherefore met only once in the financial year.

AUDIT COMMITTEE

The table below shows the frequency of meetings of the Audit Committee and members’ attendance at these meetings duringthe year under review.

Members Audit committee

Number of Meetings 4

Attendance

Alhaji Hamis B. Musa 4

Mr. Michael Olusoji Ajayi 4

Ms. Angela Agidi 4

Mr. Babatunde Adejuwon 4

Mr. Jeffrey Efeyini 4

Alhaji Lawal Sani 4


ZENITH BANK PLC


(f) Disclosure of customer complaints in financial statements for the year ended 31 December 2014

Description Number Amount claimed Amount refunded

2014 2013 2014 2013 2014 2013N. N. N. N.

Pending complaint b/f 19 5 2,444,644,790 921,558,783

Received Complaints 117 84 15,619,444,423 3,825,870,583

Resolved Complaints 76 70 9,993,747,620 2,302,784,576 2,056,145,730 336,822,865

Unresolved Complaintsescalated to CBN forIntervention 10 19 4,403,793,201 2,444,644,790

Unresolved Complaintspending with the bank C/F

50 - 3,666,548,392 -

Unresolved ComplaintsC/F

60 19 8,070,341,593 2,444,644,790


ZENITH BANK PLC

Consolidated and Separate Statements of Profit or Loss and otherComprehensive Income for the Year Ended 31 December 2014

Group Bank

In millions of Naira Note(s) 2014 2013 2014 2013

Re-stated Re-stated

Gross earnings403,343 351,470 372,015 311,275

Continuing operations:

Interest and similar income 6, 47 313,422 270,538 285,171 254,331

Interest and similar expense 7 (106,919) (70,796) (99,439) (68,471)

Net interest income 206,503 199,742 185,732 185,860

Impairment charge for credit losses 8 (13,064) (11,067) (12,392) (9,907)

Net interest income after impairment charge forcredit losses 193,439 188,675 173,340 175,953

Fees and commissions income 9, 47 70,512 55,008 60,825 49,574

Trading income 10, 47 15,877 5,105 15,865 5,077

Other income 11, 47 3,532 4,499 10,154 2,293

Share of profit of associates 138 118 - -

Depreciation of property and equipment 28 (9,087) (9,766) (8,417) (9,015)

Amortisation of intangible assets 29 (728) (951) (704) (844)

Personnel expenses 40 (72,320) (59,952) (67,848) (56,864)

Operating expenses 12 (81,567) (76,527) (75,366) (72,066)

Profit before minimum tax and income tax fromcontinuing operations 119,796 106,209 107,849 94,108

Minimum tax - (2,663) - (2,663)

Income tax expense from continuing operations 13 (20,341) (11,958) (15,370) (8,031)

Profit after tax from continuing operations 99,455 91,588 92,479 83,414

Discontinued operations:

Gross income from discontinued operations - 16,320 - -

Gross expenses from discontinued operations - (11,932) - -

Profit before tax from discontinued operations - 4,388 - -

Income tax expense from discontinued operations - (658) - -

Profit after tax from discontinued operations - 3,730 - -

Continued and discontinued operations:Profit for the year before minimum tax andincome tax 119,796 110,597 107,849 94,108

Minimum tax 13 - (2,663) - (2,663)

Income tax expense 13 (20,341) (12,616) (15,370) (8,031)

Profit for the year after tax 99,455 95,318 92,479 83,414


ZENITH BANK PLC

Consolidated and Separate Statements of Profit or Loss and otherComprehensive Income for the Year Ended 31 December 2014

Group Bank


Other comprehensive income:

Items that will never be reclassified to profit or loss:

Fair value movements on equity instruments 2,549 549 2,549 549

Related tax credit / (expense) - 890 - 890

Fair value movements on equity instruments -discontinued operations - (225) - -

Items that are or may be reclassified to profit orloss:

Foreign currency translation differences for foreignoperations

3,282 (2,070) - -

Effective portion of changes in fair value of cashflow hedges

(2,771) 2,771 - -

Related tax expense 760 (760) - -

Other comprehensive income for the year, net oftax

3,820 1,155 2,549 1,439

Total comprehensive income for the year 103,275 96,473 95,028 84,853

Profit attributable to:

Equity holders of the parent 99,275 94,576 92,479 83,414

Non controlling interest 180 742 - -

99,455 95,318 92,479 83,414

Total comprehensive income attributable to:


Non-controlling interest 129 727 - -

Profit from continuing operations attributable to


Non-controlling interest 180 177 - -

Earnings per share:

Earnings per share for profit from total operationsattributable to equity holders of parent

Basic and diluted 15 316k 301k 295k 266k

Earnings per share for profit from continuingoperations attributable to equity holders of parent

Basic and diluted 15 316k 291k 295k 266k

The accompanying notes are an integral part of these consolidated and separate financial statements.


ZENITH BANK PLC

Consolidated and Separate Statements of Changes in Equity as at 31 December 2014

Group

Attributable to equity holders of the BankIn millions of Naira Share

capitalShare

premiumForeign

currencytranslation

reserve

Hedgingreserve

Revaluationreserve

(investmentsecurities)

Contingencyreserve

Statutoryreserve

SMIEISreserve

Credit riskreserve

Retainedearnings

Total Non-controlling

interest

Total equity

At 1 January 2013 15,698 255,047 (3,667) - 2,285 997 45,199 3,729 10,243 130,153 459,684 3,272 462,956Profit for the year - - - - - 374 12,563 - - 81,639 94,576 742 95,318Foreign currency translationdifferences

- - (2,016) - - - - - - - (2,016) (54) (2,070)

Effective portion of changes in fairvalue of cash flow net of tax

- - - 1,972 - - - - - - 1,972 39 2,011

Fair value movements on equityinstruments, net of tax

- - - - 1,214 - - - - - 1,214 - 1,214

Total comprehensive income forthe year

- - (2,016) 1,972 1,214 374 12,563 - - 81,639 95,746 727 96,473

Transfer between reserves - - - - - - - - 454 (454) - - -Dividends - - - - - - - - - (50,234) (50,234) - (50,234)Changes in ownership interest -control not lost

- - - - - - - - - 40 40 16 56

At 31 December 2013 15,698 255,047 (5,683) 1,972 3,499 1,371 57,762 3,729 10,697 161,144 505,236 4,015 509,251

Profit for the year - - - - - - 13,872 - - 85,403 99,275 180 99,455Foreign currency translationdifferences

- - 3,294 - - - - - - - 3,294 (12) 3,282

Fair value movements on equityinstruments, net of tax

- - - - 2549 - - - - - 2,549 - 2,549

Effective portion of changes in fairvalue of cash flow hedges net oftax

- - - (1,972) - - - - - - (1,972) (39) (2,011)


- - 3,294 (1,972) 2,549 - 13,872 - - 85,403 103,146 129 103,275

Transfer between reserves - - - - - - 6,633 - 1,575 (8,208) - - -Dividends - - - - - - - - - (54,943) (54,943) - (54,943)Disposal of investments - - - - 18 (1,371) - - - - (1,353) (3,548) (4,901)Other - - - - - - - - - - - (44) (44)

As at 31 December 2014 15,698 255,047 (2,389) - 6,066 - 78,267 3,729 12,272 183,396 552,086 552 552,638


ZENITH BANK PLC

Consolidated and Separate Statements of Changes in Equity as at 31 December 2014

Bank

In millions of Naira Sharecapital

Sharepremium

Revaluationreserve

(InvestmentSecurities)

Statutoryreserve

SMIEISreserve

Credit riskreserve

Retainedearnings

Total Total equity

At 1 January 2013 15,698 255,047 2,078 45,198 3,729 10,243 106,010 438,003 438,003Profit for the year - - - 12,512 - - 70,902 83,414 83,414Fair value movements on equityinstruments, net of tax

- - 1,439 - - - - 1,439 1,439


- - 1,439 12,512 - - 70,902 84,853 84,853

Dividend - - - - - - (50,234) (50,234) (50,234)

At 31 December 2013 15,698 255,047 3,517 57,710 3,729 10,243 126,678 472,622 472,622

Profit for the year - - - 13,872 - - 78,607 78,607 78,607Fair value movements on equityinstruments, net of tax

- - 2,549 - - - - 2,549 2,549


- - 2,549 13,872 - - 78,607 95,028 95,028

Dividend - - - - - - (54,943) (54,943) (54,943)

At 31 December 2014 15,698 255,047 6,066 71,582 3,729 10,243 150,342 512,707 512,707



ZENITH BANK PLC

Consolidated and Separate Statements of Cash Flows for the Year Ended 31 December 2014

Group Bank


Cash flows from operating activities

Profit after tax for the year 99,455 95,318 92,479 83,414

Adjustments for non-cash items:

Impairment loss - - - -

On overdraft 8 10,929 8,059 10,257 6,899

On term loans 8 2,145 2,774 2,145 2,774

On on-lending 8 - 179 - 179

On leases 8 (10) 55 (10) 55

On investment in associates 24 - 371 - 371

Fair value changes recognised in profit and loss (336) (64) (336) (39)

Depreciation of property and equipment 28 9,087 9,766 8,417 9,015

Amortisation of intangible assets 29 728 951 704 844

Dividend income 11 (455) (303) (455) (303)

Net interest income 6,7 &47 (206,503) (189,263) (185,731) (175,381)

Share of (profit)/loss of associates 24 (138) (118) - -

Profit on sale of property and equipment 11 (153) (151) (151) (124)

Gain on disposal of subsidiary 11 (510) - (7,033) -

Tax expenses 13 20,341 15,279 15,370 10,694

(65,420) (57,147) (64,344) (61,602)

Changes in operating asset and liabilities:

Net (increase)/decrease in loans and advances 21 (491,216) (272,085) (467,942) (241,112)

Net (increase)/decrease in other assets 26 14,783 (7,573) 12,022 (14,601)

Net (increase)/decrease in treasury bills with maturitiesgreater than three months

144,001 157,139 140,966 151,982

Net (increase)/decrease in restricted balances (cashreserve)

16 (159,453) (168,557) (159,449) (169,009)

Net assets of subsidiary disposed 27,35 (16,343) - - -

Net (increase)/decrease in debt securities 22 39,781 (3,716) 56,256 45,670

Net (increase)/decrease in customer deposits 30 260,556 347,511 185,400 277,854

Net (increase)/decrease in other liabilities 31 79,155 100,310 76,075 88,050

(194,156) 95,882 (221,016) 77,232

Interest received 6 313,422 260,059 285,171 243,852

Interest paid 7 (106,919) (70,796) (99,439) (68,471)

Tax paid 13 (16,374) (19,724) (11,986) (15,182)

VAT paid 31 (4,940) (2,022) (4,614) (1,812)

Cash flow from discontinued operations (11,070) 2,180 - -

Net cash flows (used in)/generated from operations (20,037) 265,579 (51,884) 235,619


ZENITH BANK PLC

Consolidated and Separate Statements of Cash Flows for the Year Ended 31 December 2014

Group Bank


Cash flows from investing activities

Purchase of property and equipment 28 (12,232) (10,772) (10,701) (9,826)

Proceed from sale of property and equipment 28 232 218 252 163

Purchase of intangible assets 29 (947) (1,421) (902) (1,313)

Purchase of equity securities 22 - (700) - (700)

Divestment from associated companies - 2 - 2

Dividend received 11 455 303 455 303

Investments in subsidiaries - - (8,628) -

Proceed from sale of subsidiaries 23 9,995 - 9,995 -

Proceed from sale of discontinued operations 3,970 1,845 - 5,589

Net cash from investing activities 1,473 (10,525) (9,529) (5,782)

Cash flows from financing activities

Borrowed funds

Inflow from long term borrowing 33 149,626 50,209 149,626 50,209

Repayment of long term borrowing 33 (11,710) (5,197) (11,710) (5,197)

Inflow from On-lending facilities 32 8,816 3,462 8,816 3,462

Dividends paid to shareholders 43 (54,943) (50,234) (54,943) (50,234)

Net cash from changes in ownership interest insubsidiaries

3,511 56 - -

Net cash from financing activities 95,300 (1,704) 91,789 (1,760)

(Decrease)/Increase in cash and cash equivalent 76,736 253,350 30,376 228,077

Analysis of changes in cash and cash equivalents :

Cash and cash equivalent at the start 866,721 614,817 841,477 613,400

(Decrease)/Increase in cash and cash equivalent 76,736 253,350 30,376 228,077

Cash and cash equivalent from discontinued operations 24,595 143 - -

Effect of exchange rate movement on cash balances (2,329) (1,589) - -

Cash and cash equivalents at end of the year 44 965,723 866,721 871,853 841,477



ZENITH BANK PLC


1. General information

Zenith Bank Plc (the "Bank") was incorporated in Nigeria under the Companies and Allied Matters Act as a private limitedliability company on May 30, 1990. It was granted a banking licence in June 1990, to carry on the business of commercialbanking and commenced business on 16 June 1990. The Bank was converted into a Public Limited Liability Company onMay 20, 2004. The Bank’s shares were listed on October 21, 2004 on the Nigerian Stock Exchange.

The principal activity of the Bank is the provision of banking and other financial services to corporate and individualcustomers. Such services include granting of loans and advances, corporate finance and money market activities.

The Bank has five subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pension Custodian Limited, ZenithBank (UK) Limited, Zenith Bank (Sierra Leone) Limited, and Zenith Bank (Gambia) Limited.

In line with regulatory directives on the scope of banking operations in Nigeria, the Bank has concluded the divestment fromits non-core banking operations (excluding Zenith Pensions Custodian Limited). During the year, the Bank successfullydivested from Zenith Registrars Limited, Zenith Securities Limited, Zenith Capital Limited, Zenith General InsuranceCompany, Zenith Medicare Limited, Zenith Trustees Limited and Zenith Life Assurance Company Limted.

The consolidated financial statements as at and for the year ended 31 December 2014 comprise the Bank and itssubsidiaries (together referred to as "the Group" and individually as "Group entities") and the Group's interest in associates.The separate financial statements comprise the Bank. The consolidated and separate financial statements for the yearended 31 December 2014 were approved for issue by the Board of Directors on 05 February 2015.

The Group does not have any unconsolidated structured entity.

2(i) Changes in accounting policies

Except as noted below, the Group has consistently applied the accounting policies as set out in Note 2(ii) to all periodspresented in these consolidated financial statements.

The Group has adopted the following new standards and amendments to standards, including any consequentialamendments to other standards, with a date of initial application of 1 January 2014.(a) IFRIC 21- Levies.(b) Amendments IAS 32 – Financial Instruments (Offsetting Financial Assets and Financial Liabilities).

The nature and the effects of the changes are explained below.

(a) IFRIC 21- Levies.

As a result of IFRIC 21 levies, the Group has changed its accounting policy on accounting for a liability to pay a levy that isa liability in the scope of IAS 37 Provisions, contingent liabilities and contingent assets.

(b) Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32).

As a result of the amendments to IAS 32, the Group has changed its accounting policy for offsetting financial assets andfinancial liabilities. The amendments clarify when an entity currently has a legally enforceable right to set-off and whengross settlement is equivalent to net settlement.

The change did not have a material impact on the Group's financial statements..

2 (ii) Significant accounting policies

Except for the changes explained in Note 2(i), the Group has consistently applied the following accounting policies to allperiods presented in these consolidated financial statements, unless otherwise stated.


ZENITH BANK PLC


2.1 Basis of preparation

a. Statement of compliance

The financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued bythe International Accounting Standard Board (IASB) and in the manner required by the Companies and Allied Matters Act ofNigeria, the Financial Reporting Council of Nigeria Act, 2011, the Banks and other Financial Institutions Act of Nigeria, andrelevant Central Bank of Nigeria circulars. The IFRS accounting policies have been consistently applied to all periodspresented.

b. Basis of measurement

The financial statements have been prepared in accordance with the going concern principle under the historical costconvention as modified by the measurement of certain financial assets and financial liabilities held at fair value.

c. Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. Italso requires management to exercise its judgement in the process of applying the Group's accounting policies. The areasinvolving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to theconsolidated and separate financial statements are disclosed in Note 4.

2.2 New standards, interpretations and amendments to existing standards that are not yet effective

IFRS 9 early adoption

IFRS 9, Financial Instruments (amended November 2013), which is available for early adoption has been early adoptedbythe group in the preparation of this financial statement as permitted by the standard.

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1January 2014, and have not been applied in preparing these consolidated and separate financial statements.

The Group plan to adopt these standards at their respective effective dates. Management is in the process of assessingtheimpact of these standards on the Group.

(i) IFRS 9, Financial Instruments (Revised)

On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.

Impaired loans that are not individually significant are included in the collective impairment.This standard will have asignificant impact on the Group, which will include changes in the measurement bases of the Group’s financial assets toamortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though thesemeasurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different.In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model from IAS 39 to an “expectedcredit loss” model, which is expected to increase the provision for bad debts recognised in the Group.

The amendments apply retrospectively. IFRS 9 allows users who have early adopted the first version of The Revised IFRS9 to continue the adoption. The Group is therefore continuing with the early adoption of the initial IFRS 9 and will fully adoptthe revised IFRS 9 for the year ending 31 December 2018.

(ii) Defined benefit plans: Employee contributions (Amendments to IAS 19)

The amendments introduce relief that will reduce the complexity and burden of accounting for certain contributions fromemployees or third parties. Such contributions are eligible for practical expedient if they are:

set out in the formal terms of the plan;

linked to service; and

Independent of the number of years of service.


ZENITH BANK PLC


When contributions are eligible for the practical expedient, a company is permitted (but not required) to recognise them as areduction of the service cost in the period in which the related service is rendered. The Group’s defined benefit plan meetsthese requirements and consequently the Group intends to apply this amendment and will recognise the contributions asreduction of the service costs in the period in which the related service is rendered.

(iii) Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

The amendments to IAS 16 Property, Plant and Equipment explicitly state that revenue-based methods of depreciationcannot be used for property, plant and equipment.

The amendments to IAS 38 Intangible Assets introduce a rebuttable presumption that the use of revenue-basedamortisation methods for intangible assets is inappropriate. The presumption can be overcome only when revenue and theconsumption of the economic benefits of the intangible asset are ‘highly correlated’, or when the intangible asset isexpressed as a measure of revenue.

The Group does not have intangible assets and plants that are amortised or depreciated using a revenue-basedmethod.This amendment does not materially affect the Group.

(iv) Equity method in separate financial statements (Amendments to IAS 27)

The amendments allow an entity to apply the equity method in its separate financial statements to account for itsinvestments in subsidiaries, associates and joint ventures.

The amendments apply retrospectively.

(v) Disclosure initiative (Amendments to IAS 1)

The amendments provide additional guidance on the application of materiality and aggregation when preparing financialstatements.

(vi) Investment entities: Applying the consolidation exception (Amendments to IFRS10, IFRS 12 and IAS 28)

The amendment to IFRS 10 Consolidated Financial Statements clarifies which subsidiaries of an investment entity areconsolidated instead of being measured at fair value through profit and loss. The amendment also modifies the condition inthe general consolidation exemption that requires an entity’s parent or ultimate parent to prepare consolidated financialstatements. The amendment clarifies that this condition is also met where the ultimate parent or any intermediary parent ofa parent entity measures subsidiaries at fair value through profit or loss in accordance with IFRS 10 and not only where theultimate parent or intermediate parent consolidates its subsidiaries.

The amendment to IFRS 12 Disclosure of Interests in Other Entities requires an entity that prepares financial statements inwhich all its subsidiaries are measured at fair value through profit or loss in accordance with IFRS 10 to make disclosuresrequired by IFRS 12 relating to investment entities.

The amendment to IAS 28 Investments in Associates and Joint Ventures modifies the conditions where an entity need notapply the equity method to its investments in associates or joint ventures to align these to the amended IFRS 10 conditionsfor not presenting consolidated financial statements. The amendments introduce relief when applying the equity methodwhich permits a non-investment entity investor in an associate or joint venture that is an investment entity to retain the fairvalue through profit or loss measurement applied by the associate or joint venture to its subsidiaries.

The amendments apply retrospectively.

(vii) IFRS 15: Revenue from contracts with customers

This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue –Barter of Transactions Involving Advertising Services.

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue:at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether,how much and when revenue is recognised.


ZENITH BANK PLC


This new standard is not expected to have a significant impact on the Group. The Group is currently in the process ofperforming a more detailed assessment of the impact of this standard on the Group.

The Group will adopt the amendments for the year ending 31 December 2017.

2.3 Basis of Consolidation

a Subsidiaries

Subsidiaries are investees controlled by the Group. The Group controls an investee if it is exposed to, or has the rights tovariable return from its involvement with the investee and has the ability to affect those returns through its power over theinvestee. The Group reassesses whether it has control if there are changes to one or more elements of control. Thisincludes circumstances in which protective rights held become substantive and lead to the Group having power over aninvestee.

The financial statements of subsidiaries are consolidated from the date the Group acquires control, up to the date that sucheffective control ceases. For the purpose of these financial statements, subsidiaries are entities over which the Group haveexposure or rights to variable returns and the ability to affect those returns through its power over the subsidiary.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equitytransactions (transactions with owners). Any difference between the amount by which the non-controlling interest isadjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the Group.

Inter-company transactions, balances and unrealised gains on transactions between companies within the Group areeliminated on consolidation. Unrealised losses are also eliminated in the same manner as unrealised gains, but only to theextent that there is no evidence of impairment. Accounting policies of subsidiaries have been changed where necessary toensure consistency with the policies adopted by the Group.

In the separate financial statements, investments in subsidiaries and associates are measured at cost.

b Loss of Control

On loss of control, the Group derecognises the assets and liabilities of the subsidiary, any controlling interests and the othercomponents of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit orloss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date thatcontrol is lost. Subsequently, that retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

c Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying ashareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equitymethod of accounting and are initially recognised at cost. The Group's investment in associates includes goodwill identifiedon acquisition, net of any accumulated impairment loss.

The Group's share of its associates' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjustedagainst the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds itsinterest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless ithas incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interestin the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of theasset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with thepolicies adopted by the Group. Dilution gains and losses arising in investments in associates are recognised in profit orloss.

d Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree's identifiable net assets at theacquisition date. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for asequity transactions.


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2.4 Translation of foreign currencies

Foreign currency transactions and balances

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primaryeconomic environment in which the entity operates (functional currency). The parent entity’s functional currency (NigerianNaira) is adopted as the presentation currency for the consolidated financial statements. Except as otherwise indicated,financial information presented in Naira has been rounded to the nearest million.

(b) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy)that have a functional currency different from the presentation currency are translated into the presentation currency asfollows:

assets and liabilities for statement of financial position presented are translated at the closing rate at thereporting date;

income and expenses for each statement of comprehensive income are translated at average exchange rates(unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on thetransaction dates, in which case income and expenses are translated at the rate on the dates of thetransactions); and

all resulting exchange differences are recognised in other comprehensive income.

On the disposal of a foreign operation, the Group recognises in profit or loss the cumulative amount of exchangedifferences relating to that foreign operation. When a subsidiary that includes a foreign operation is partially disposed of orsold, the Group re-attributes the proportionate share of the cumulative amount of the exchange differences recognised inother comprehensive income to the non-controlling interests in that foreign operation. In the case of any other partialdisposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amountof exchange differences recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of theforeign entity and translated at the closing rate at the reporting date.

(c) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates ofthe transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in profit or loss.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are translated tothe functional currency using the exchange rate at the transaction date, and those measured at fair value are translated tothe functional currency at the exchange rate at the date that the fair value was determined. Exchange differences on non-monetary assets are accounted for based on the classification of the underlying items.

Translation differences on non-monetary financial assets and liabilities held at fair value through profit or loss arerecognised in profit or loss as part of the fair value gain or loss. Translation differences on equities measured at fair valuethrough other comprehensive income are included in other comprehensive income and transferred to thr revaluationreserves.

Foreign currency gains and losses on intra-group loans are recognised in profit or loss unless settlement of the loan isneither planned nor likely to occur in the foreseeable future, in which case the foreign currency gains and losses are initiallyrecognised in the foreign currency translation reserve in the consolidated financial statements. Those gains and losses arerecognised in profit or loss at the earlier of settling the loan or at the time at which the foreign operation is disposed.

2.5 Cash and cash equivalents

For the purposes of the statement of cash flow, cash and cash equivalents comprise balances with less than three months’maturity from the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and othereligible bills, loans and advances, amounts due from other banks and short-term government securities.


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2.6 Financial instruments

(a) Initial recognition and measurement

Financial instruments at fair value through profit or loss are recognised at fair value with transaction costs, which aredirectly attributable to the acquisition or issue of the financial instruments, being recognised immediately through profit orloss. Financial instruments that are not carried at fair value through profit or loss are initially measured at fair value plustransaction costs that are directly attributable to the acquisition or issue of the financial instruments.

Financial instruments are recognised or de-recognised on the date the Group commits to purchase or sell the instruments(trade day accounting).

(b) Subsequent measurement

Subsequent to initial measurement, financial instruments are measured either at fair value or amortised cost depending ontheir classification.

(c) Classification

(i) Financial assets

The Group classifies its financial assets as subsequently measured at amortised cost or fair value.

A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to holdassets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified datesto cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest in this contextis consideration for the time value of money and for the credit risk associated with the principal amount outstanding during aparticular period of time. Interest income is recognised in Interest and similar income.

The following instruments have been measured at amortised cost; Loans and advances Debt securities (included in debt securities are bonds and treasury bills).

All other financial assets are subsequently measured at fair value. Financial assets which meet the requirement formeasurement at amortised cost may also be designated as measured at fair value through profit or loss if doing soeliminates or significantly reduces a measurement or recognition inconsistency (accounting mismatch). Gains and lossesarising from changes in the fair value of financial assets subsequently measured at fair value are recognised in profit or loss("FVTPL"), except where the Group elects to present in other comprehensive income fair value gains and losses arising oninvestments in equity instruments which are not held for trading but for strategic purposes ("Fair value through OCI"). Gainsand losses recognised directly in other comprehensive income are not subsequently transferred to profit or loss on disposalof the equity instrument.

The following instruments have been measured at fair value through profit or loss, or other comprehensive income: Financial guarantees measured at fair value through profit or loss. Equity securities measured at fair value through other comprehensive income. Trading debt securities measured at fair value through profit or loss. Derivatives held for risk management purposes and hedge accounting measured at fair value through OCI

(effective portion of changes in fair value) and through profit or loss (ineffective portion of changes in fair value).

(ii) Financial liabilities

Financial liabilities consist of financial liabilities at fair value through profit or loss and financial liabilities at amortised cost.

Financial liabilities that are not classified at fair value through profit or loss are measured at amortised cost. Interestexpense is recognised in Interest and similar expense in the profit or loss.

No financial liabilities have been classified as fair value through profit or loss at the reporting date.


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(iii)(a) Financial guarantees

A financial guarantee contract is a contract that requires the Group (issuer) to make specified payments to reimburse theholder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original ormodified terms of a debt instrument.

Financial guarantee liabilities are initially recognised at fair value, which is generally equal to the premium received, andthen amortised over the life of the financial guarantee. Subsequent to initial recognition, the financial guarantee liability ismeasured at the higher of the present value of any expected payment, when a payment under the guarantee has becomeprobable, and the unamortised premium.

(b) Contingent liabilities and Commitments

The Group conducts business involving commitments to customers. The majority of these facilities are offset bycorresponding obligations of third parties. Contingent liabilities and commitments comprise usance lines and letters ofcredit.

Usance and letters of credit are agreements to lend to a customer in the future subject to certain conditions. An acceptanceis an undertaking by a bank to pay a bill of exchange drawn on a customer. The Group expects most acceptances to bepresented, but reimbursement by the customer is normally.

Immediate. Letters of credit are given as security to support the performance of a customer to third parties. As the Groupwill only be required to meet these obligations in the event of the Customer’s default, the cash requirements of theseinstruments are expected to be considerably below their nominal amounts.

Contingent liabilities and commitments are initially recognized at fair value which is also generally equal to the fees receivedand amortized over the life of the commitment.

(iv) Debt securities issued

Deposits and debt securities issued are the Group’s sources of debt funding. Debt securities issued are initially measuredat fair value plus transaction costs, and subsequently measured at their amortised cost using the effective interest method.

(d) Determination of fair value

At initial recognition, the best evidence of the fair value of a financial instrument is the transaction price (i.e. the fair value ofthe consideration paid or received), unless the fair value of that instrument is evidenced by comparison with otherobservable current market transactions in the same instrument, without modification or repackaging, or based on valuationtechniques such as discounted cash flow models and option pricing models whose variables include only data fromobservable markets.

Subsequent to initial recognition, the fair value of a financial instrument is based on quoted market prices or dealer pricequotation for financial instruments traded in an active market. If the market for a financial instrument is not active or theinstrument is not listed, the fair value is determined using valuation techniques. Refer to note 3.3.6(b) for a description ofthe valuation techniques used by the Group.

(e) Derecognition

Financial assets are de-recognised when the contractual rights to receive the cash flows from these assets have expired orthe Group has transferred the financial asset in a transaction in which substantially all the risks and rewards of ownership ofthe financial assets are transferred or which the Group neither retains substantially all the risks and rewards of ownershipand it does not retain control of the financial assets. Any interest in transferred financial assets that qualify for de-recognition that is created or retained by the Group is recognised as a separate asset or liability in the statement of financialposition. On de-recognition of a financial asset, the difference between the carrying amount of the asset (or the carryingamount allocated to the portion of the asset transferred), and consideration received (including any new asset obtained lessany new liability assumed) is recognised in profit or loss.

The Group enters into transactions whereby it transfers assets recognised in the statement of financial position, but retainseither all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially allrisks and rewards are retained, then the transferred assets are not de-recognised. Transfers of assets with retention of allor substantially all risks and rewards include, for example, securities lending and repurchase transactions.


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In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of afinancial asset and it retains control over the asset, the Group continues to recognise the asset to the extent of itscontinuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

(f) Offsetting

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and onlywhen, the Group has a legal right to set off the recognised amounts and it intends to settle on a net basis or to realise theasset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arsing from agroup of similar transactions. Gains and loss are presented separately if they are material.

(g) Amortised cost measurement

The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initialrecognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest rate methodof any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

(h) Fair value measurement

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date in the principal or, in its absence, the most advantageous market to which theGroup has access at that date. The fair value of a liability reflects its non performance risk.

If a market for a financial instrument is not active, then the Group establishes fair value using a valuation technique. Thechosen valuation technique makes maximum use of market inputs, relies as little as possible on estimates specific to theBank, incorporates all factors that market participants would consider in setting a price and is consistent with acceptedeconomic methodologies for pricing financial instruments.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price – i.e. the fair valueof the consideration given or received. However, in some cases the initial estimate of fair value of a financial instrument oninitial recognition may be different from its transaction price. If this estimated fair value is evidenced by comparison withother observable current market transactions in the same instrument (without modification or repackaging) or based on avaluation technique whose variables include only data from observable markets, then the difference is recognised in profitor loss on initial recognition of the instrument. In other cases, the fair value at initial recognition is considered to be thetransaction price and the difference is not recognised in profit or loss immediately but is recognised over the life of theinstrument on an appropriate basis or when the instrument is redeemed, transferred or sold, or the fair value becomesobservable.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and longpositions at a bid price and liabilities and short positions at an ask price. Where the Bank has positions with offsetting risks,mid market prices are used to measure the offsetting risk positions and a bid or ask price adjustment is applied only to thenet open position as appropriate.

The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on whichthe amount could be required to be paid.

The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during whichthe change has occurred.

If a market for a financial instrument is not active, then the Group establishes fair value using a valuation technique.Valuation techniques include using recent arm's length transactions between knowledgeable, willing parties (if available),reference to the current fair value of other instruments that are substantially the same, discounted cash flow analyses andoption pricing models. The chosen valuation technique makes maximum use of market inputs, relies as little as possible onestimates specific to the Group, incorporates all factors that market participants would consider in setting a price, and isconsistent with accepted economic methodologies for pricing financial instruments. Inputs into valuation techniquesreasonably represent market expectations and measures of the risk-return factors inherent in the financial instrument.


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See note 3.3.6 (c) on fair value disclosures of financial assets and liabilities.

(i) Pledge of assets as collateral

Financial assets transferred to external parties that do not qualify for de-recognition are reclassified in the statement offinancial position from treasury bills and investment securities to assets pledged as collateral, if the transferee has receivedthe right to sell or re-pledge them in the event of default from agreed terms. Initial recognition of assets pledged ascollateral is at fair value, whilst subsequently measured at amortized cost.

2.7 Derivatives instruments and hedge accounting

The Group recognizes the derivative instruments on the statement of financial position at their fair value. At inception, theGroup designates the derivative as (1) derivative held for risk management purposes, or (2) an instrument that is held fortrading or non-hedging purposes (a “trading” or “non-hedging” instrument).

(1) Derivatives held for risk management purposes and hedge accounting

Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as tradingassets or liabilities. Derivatives held for risk management purposes are measured at fair value in the statement of financialposition

The Group designates certain derivatives held for risk management as hedging instruments in qualifying hedgingrelationships. On initial designation of the hedge, the Group formally documents the relationship between the hedginginstrument(s) and hedged item(s), including the risk management objective and strategy in undertaking the hedge, togetherwith the method that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment,both at inception of the hedge relationship and on an ongoing basis, of whether the hedging instrument(s) is(are) expectedto be highly effective in offsetting the changes in the fair value or cash flows of the respective hedged item(s) during theperiod for which the hedge is designated, and whether the actual results of each hedge are within acceptable profitablerange. The Group makes an assessment for a cash flow hedge of a forecast transaction, of whether the forecasttransaction is highly probable to occur and presents an exposure to variations in cash flows that could ultimately affect profitor loss.

These hedging relationships are discussed below.

Cash flow hedges

When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to aparticular risk associated with a recognised asset or liability that could affect profit or loss, the effective portion of changesin the fair value of the derivative is recognised in OCI and presented in the hedging reserve within equity. Any ineffectiveportion of changes in the fair value of the derivative is recognised immediately in profit or loss. The amount recognised inOCI is reclassified to profit or loss as a reclassification adjustment in the same period as the hedged cash flows affect profitor loss, and in the same line item in the statement of profit or loss and OCI.

If the hedging derivative expires or is sold, terminated, or exercised, or the hedge no longer meets the criteria for cash flowhedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. However, ifthe derivative is novated to a central counterparty by both parties as a consequence of laws or regulations without changesin its terms except for those that are necessary for the novation, then the derivative is not considered as expired orterminated.

(2) Trading or non-hedging derivatives assets and liabilities

Trading or non-hedging derivatives assets and liabilities are those derivative assets and liabilities that the Group acquires orincurs for the purpose of selling or purchasing in the near term, or holds as part of a portfolio that is managed together forshort-term profit or position taking

Non-hedging derivative assets and liabilities are initially recognized and subsequently measured at fair value in thestatement of financial position. All changes in fair value are recognized as part of net trading income in profit or loss. Non-hedging derivative assets and liabilities are not reclassified subsequent to their initial recognition.


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2.8 Impairment of financial assets

Assets carried at amortised cost

The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financialassets not carried at fair value through profit or loss is impaired. A financial asset or a group of financial assets is impairedand impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events thatoccurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on theestimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include: Delinquency in contractual payments of principal or interest; Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales); Breach of loan covenants or conditions; Initiation of bankruptcy proceedings; Deterioration of the borrower’s competitive position; Deterioration in the value of collateral; and Downgrading below investment grade level.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that areindividually significant, and individually or collectively for financial assets that are not individually significant. If the Groupdetermines that no objective evidence of impairment exists for an individually assessed financial asset, whether significantor not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assessesthem for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continuesto be recognised are not included in a collective assessment of impairment.

The amount of impairment loss for financial assets carried at amortised cost is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have notbeen incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset isreduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. If a financialinstrument has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interestrate determined under the contract.

The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cashflows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure isprobable.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit riskcharacteristics (i.e. on the basis of the Group’s grading process that considers asset type, industry, geographical location,collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of futurecash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to thecontractual terms of the assets being evaluated.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis ofthe contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristicssimilar to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect theeffects of current conditions that did not affect the period on which the historical loss experience is based and to remove theeffects of conditions in the historical period that do not currently exist.

Estimates of changes in future cash flows for groups of assets are reflected and directionally consistent with changes inrelated observable data from period to period (for example, changes in unemployment rates, property prices, paymentstatus, or other factors indicative of changes in the probability of losses in the group and their magnitude). The methodologyand assumptions used for estimating future cash flows are reviewed regularly by the Group to reduce any differencesbetween loss estimates and actual loss experience.

When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written offafter all the necessary procedures have been completed and the amount of the loss has been determined.


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If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to anevent occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previouslyrecognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised inprofit or loss under impairment charge for credit losses.

Amount reported as other assets are tested for impairment on an individual basis at the reporting date. In testing forimpairment, the Group assess whether there is objective evidence that a loss event has occur. If it is established that a lossevent has occured and the loss event has an impact on the recoverable amount of the asset, an impairment charge istaking against the asset carrying amount.

2.9 Impairment of non-financial assets

The carrying amounts of the Group's non-financial assets, other than deferred tax assets, are reviewed at each reportingdate to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverableamount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, therecoverable amount is estimated each year at the same time.

An impairment loss is recognised if the carrying amount of an asset or its Cash Generating Unit (CGU) exceeds itsestimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risks specific to the asset orCGU. For the purposes of assessing impairment, assets that cannot be tested individually are grouped together into thesmallest group of assets that generates cash inflows from continuing use that are largely independent of the cash flows ofother assets or CGU.

The Group's corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporateassets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of theCGU to which the corporate asset is allocated.

Impairment losses are recognised in profit or loss. Impairment losses in respect of CGUs are allocated first to reduce thecarrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the otherassets in the CGU (group of CGUs) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss hasdecreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used todetermine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount doesnot exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment losshad been recognised. An impairment loss in respect of goodwill is not reversed.

2.10 Property and equipment

(a) Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses.Historical cost includes expenditure that is directly attributable to the acquisition of the items. Where significant parts of anitem of property and equipment have different useful lives, they are accounted for as separate items (major components) ofproperty and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only whenit is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can bemeasured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which theyare incurred.

Property and equipment are depreciated on the straight line basis to their residual values over the estimated useful lives ofthe assets. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate at each reporting date andthe depreciation method is reviewed at each financial year end. Leasehold land and buildings are depreciated over theperiod of the lease or over such lesser period as is considered appropriate.

Depreciation is calculated on a straight line basis to write down the cost of property and equipment to their residual valuesover their estimated useful lives as follows:


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ItemLeasehold land Over the remaining lease periodMotor vehicles 4 yearsOffice equipment 5 yearsFurniture and fittings 5 yearsComputer hardware and equipment 3 yearsBuildings 50 yearsLeasehold improvement Over the remaining lease period

Depreciation is included in profit or loss.

Work in progress consists of items of property and equipment that are not yet available for use. Work in progress is carriedat cost less any required impairment. Depreciation starts when assets are available for use. An impairment loss isrecognised if the asset’s recoverable amount is less than cost. The asset is reviewed for impairment when events orchanges in circumstances indicate that the carrying amount may not be recoverable. Once the items are available for use,they are transferred to relevant classes of property and equipment as appropriate.

Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in profit orloss.

Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted if appropriate.

2.11 Intangible assets

(a) Computer software

Software not integral to the related hardware acquired by the Group is stated at cost less accumulated amortisation andaccumulated impairment losses.

Costs associated with maintaining computer software programmes are recognised as an expense as incurred.Development costs that are directly attributable to the design and testing of identifiable and unique software productscontrolled by the Group, are recognised as intangible assets when the following criteria are met:

it is technically feasible to complete the software product so that it will be available for use; management intends to complete the software product and use or sell it; there is an ability to use or sell the software product; it can be demonstrated how the software product will generate probable future economic benefits; adequate technical, financial and other resources to complete the development and to use or sell the software

product are available; and the expenditure attributable to the software product during its development can be reliably measured.

Subsequent expenditure on computer software is capitalised only when it increases the future economic benefits embodiedin the specific asset to which it relates.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of the software, from thedate that the asset is available for use since this most closely reflects the expected pattern of consumption of the futureeconomic benefits embodied in the asset. The estimated useful life is 5 years.

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

2.12 Leases

(a) A Group company is the lessee

Leases, where the Group assumes substantially all the risks and rewards of ownership, are classified as finance leases.Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the presentvalue of the minimum lease payments. Lease payments are separated using the interest rate implicit in the lease to identifythe finance cost, which is charged against income over the lease period, and the capital repayment, which reduces theliability to the lessor.


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Leases of assets are classified as operating leases if the lessor effectively retains all the risks and rewards of ownership.Payments made under operating leases, net of any incentives received from the lessor, are charged to profit or loss on astraight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired,any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in whichtermination takes place.

(b) A Group company is the lessor

Lease and instalment sale contracts are primarily financing transactions in banking activities, with rentals and instalmentsreceivable, less unearned finance charges, being included in Loans and advances to customers in the statement offinancial position.

Finance charges earned are computed using the effective interest method which reflects a constant periodic return on theinvestment in the finance lease. Initial direct costs paid are capitalised to the value of the lease amount receivable andaccounted for over the lease term as an adjustment to the effective rate of return.

Leases of assets under which the Group effectively retains all the risks and rewards of ownership are classified asoperating leases. Receipts of operating leases from properties held as investment properties in investment managementand life insurance activities, net of any incentives given to lessees, are accounted for as income on the straight-line basisover the period of the lease. When an operating lease is terminated before the lease period has expired, any paymentrequired by the lessee by way of penalty is recognised as income in the period in which termination takes place.

2.13 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliableestimate of the amount of the obligation can be made. Provisions are determined by discounting the expected future cashflows using a pre-tax discount rate that reflects current market assessments of the time value of money and, whereappropriate, the risks specific to the liability.

A provision for restructuring is recognised when the Group has approved a detailed formal plan, and the restructuring eitherhas commenced or has been announced publicly. Future operating costs or losses are not provided for. A provision foronerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than theunavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lowerof the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provisionis established, the Group recognises any impairment loss on the assets associated with that contract.

Contingent liabilities are possible obligations that arise from past events whose existence will be confirmed only by theoccurrence, or non-occurrence, of one or more uncertain future events not wholly within the Group’s control. Contingentliabilities are not recognised in the financial statements but are disclosed in the notes to the financial statements.

Provisions are recognised when the separate entities in the Group have a present or constructive obligation as a result ofpast events and it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation and reliable estimate of the amount of the obligation can be made.

2.14 Employee benefits

(a) Post-employment benefits

The Group has a defined contribution plan.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. TheGroup has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to payall employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, theGroup makes contributions on behalf of qualifying employees to a mandatory scheme under the provisions of the PensionReform Act. The Group has no further payment obligations once the contributions have been paid. The contributions arerecognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extentthat a cash refund or a reduction in the future payments is available. For entities operating in Nigeria, the contribution byemployees and the employing entities are 2.5% and 12.5% respectively of the employees' basic salary, housing andtransport allowances. Entities operating outside Nigeria contribute in line with the relevant pension laws in their jurisdictions.


ZENITH BANK PLC


(b) Short-term benefits

Short-term benefits consist of salaries, accumulated leave allowances, profit share, bonuses and any non-monetarybenefits.

Short-term employees’ benefits are measured on an undiscounted basis and are expensed as the related services areprovided.

A liability is recognised for the amount expected to be paid under short-term cash benefits such as accumulated leave andleave allowances if the Group has a present legal or constructive obligation to pay this amount as a result of past servicesprovided by the employee and the obligation can be measured reliably.

(c) Termination benefits

The Group recognises termination benefits as an expense when the Group is demonstrably committed , without realisticpossibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or toprovide ternmination benefits as a result of an offer made to encourage voluntary redundancy. The Group settlestermination benefits within twelve months and are accounted for as short-term benefits.

2.15 Share capital and reserves

(a) Share issue costs

Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown inequity as a deduction, net of tax, from the proceeds.

(b) Dividends on ordinary shares

Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Bank’s shareholders.Dividends for the year that are declared after the end of the reporting period are dealt with in the subsequent events note.

(c) Share premium

Premiums from the issue of shares are reported in share premium.

(d) Statutory reserve

Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated bysection 16(1) of the Bank and Other Financial Institutions Act of 1991 (amended), an appropriation of 30% of profit after taxis made if the statutory reserve is less than the paid-up share capital and 15% of profit after tax if the statutory reserve isgreater than the paid-up share capital.

(e) SMIEIS reserve

The SMIEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement that all licensed banks setaside a portion of the profit after tax in a fund to be used to finance equity investments in qualifying small and medium scaleenterprises. Under the terms of the guideline (amended by CBN letter dated 11 July 2006), the contributions will be 10% ofprofit after tax and shall continue after the first 5 years but banks’ contributions shall thereafter reduce to 5% of profit aftertax. The small and medium scale industries equity investment scheme reserves are nondistributable. Transfer to thisreserve is no longer mandatory.

(f) Statutory reserve for credit risk

The Nigerian banking regulator requires the bank to create a reserve for the difference between impaired chargedetermined in line with the principles of IFRS and impaired charge determined in line with the prudential guidelines issuedby the Central Bank of Nigeria (CBN). This reserve is not available for distribution to shareholders.

(g) Retained earnings

Retained earnings comprise the undistributed profits from previous years which have not been reclassified to any specifiedreserves.


ZENITH BANK PLC


(h) Revaluation reserve

Comprises fair value movements on equity instruments.

(i) Foreign currency translation reserve

Comprises exchange differences resulting from the translation to Naira of the results and financial position of Groupcompanies that have a functional currency other than Naira.

2.16 Recognition of interest income and expense

Interest income and expense for all financial assets and financial liabilities carried at amortised cost are recognised in profitor loss using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and ofallocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactlydiscounts estimated future cash payments or receipts through the expected life of the financial instrument or, whenappropriate, a shorter period to the net carrying amount of the financial asset or financial liability. Direct incrementaltransaction costs incurred and origination fees received, including loan commitment fees, as a result of bringing margin-yielding assets or liabilities in the statement of financial position, are capitalised to the carrying amount of financialinstruments, excluding financial instruments at fair value through profit or loss, and amortised as interest income or expenseover the life of the asset as part of the effective interest rate.

When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of thefinancial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includesall fees and points paid or received between parties to the contract that are an integral part of the effective interest rate,transaction costs and all other premiums or discounts. Where the estimated cash flows on financial assets aresubsequently revised, other than impairment losses, the carrying amount of the financial assets is adjusted to reflect actualand revised estimated cash flows.

Where a financial asset or a Group of similar financial assets has been written down as a result of an impairment loss,interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuringthe impairment loss.

If a derivative is not held for trading, and is not designated in a qualifying hedge relationship, then all changes in its fairvalue are recognised immediately in profit or loss as a component of net income from other financial instruments at fairvalue through profit or loss.

(b) Borrowing cost

Borrowing cost that is directly attributable to the acquisition or construction of a qualifying asset is capitalized as part of thecost of the asset. Other borrowings, which the group undertakes in the normal course of business is expensed in the periodwhich it is incurred.

2.17 Fees, commissions and other income

Fees and commission income and expense that are integral to the effective interest rate on a financial asset or liability areincluded in the measurement of the effective interest rate. Other fees and commission income and expenses are generallyrecognised on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to bedrawn down are deferred (together with related direct costs) and recognised as an adjustment to the effective interest rateon the loan. Loan syndication fees are recognised as revenue when the syndication has been completed and the Grouphas retained no part of the loan package for itself or has retained a part at the same effective interest rate as the otherparticipants. Commission and fees arising from negotiating, or participating in the negotiation of, a transaction for a thirdparty, are recognised on completion of the underlying transaction.

Dividend income is recognised in profit or loss in the period in which the right of receipt is established.

2.18 Operating expense

Expenses are decreases in economic benefits during the accounting period in the form of outflows, depletion of assets orincurrence of liabilities that result in decrease in equity, other than those relating to distributions to equity participants.


ZENITH BANK PLC


Expenses are recognized on an accrual bases regardless of the time of spending cash. Expenses are recognized in theincome statement when a decrease in future economic benefit related to a decrease in an assets or an increase of a liabilityhas arisen that can be measured reliably.

Expenses are measured at historical cost. Assets are recorded at the amount of cash or cash equivalents paid or their fairvalue of consideration given. Liabilities are recorded at the amount of proceeds received in exchange for the obligation.

Only the portion of cost of a previous period that is related to the income earned during the reporting period is recognizedas an expense. Expenses that are not related to the income earned during the reporting period, but expected to generatefuture economic benefits, are recorded in the financial statement as assets. The portion of assets which is intended forearning income in the future periods shall be recognized as an expense when the associated income is earned.

Expenses are recognized in the same reporting period when they are incurred in cases when it is impossible to directlyrelate them to particular income earned during the current reporting period and when they are not expected to generate anyincome during the coming periods.

2.19 Current and deferred income tax

Current tax

The current income tax charge is calculated on the basis of the tax rates enacted or substantively enacted at the reportingdate in the countries where the Bank and its subsidiaries as well as associates operate and generate taxable income.Current tax aslo includes any tax arising from dividend.

Current income tax is recognised as an expense for the period and adjustments to past years except to the extent thatcurrent tax related to items that are charged or credited in OCI or directly to equity.

Deferred tax

Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax basesof assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined usingtax rates enacted or substantively enacted at the reporting date and are expected to apply when the related deferredincome tax liability is settled.

Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets and liabilities in a transaction that is not a business combination, which affects

neither accounting nor taxable profits or losses; and investments in subsidiaries where the group controls the timing of the reversal of temporary differences and it is

probable that these differences to the extent that it is probable that they will not reverse in the foreseeable future.

Deferred income tax assets are recognised on unused tax losses, unused tax credits and deductible temporary differencesonly to the extent that it is probable that future taxable profits will be available against which the temporary differences canbe utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has becomeprobable that future taxable profits will be available against which they can be used.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount ofthe asset or liability and is not discounted. Deferred tax assets are reviewed at each reporting date and are reduced to theextent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but theyintend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realisedsimultaneously.

Additional taxes that arise from the distribution of dividends by the Bank are recognised at the same time as the liability topay the related dividend is recognized. These amounts are generally recognised in profit or loss because they generallyrelate to income arising from transactions that were originally recognised in profit or loss.


ZENITH BANK PLC


Deferred tax related to the fair value re-measurement of equity instruments which are charged or credited directly to othercomprehensive income, is also credited or charged directly to other comprehensive income and is not subsequentlytransferred from equity to profit or loss.

2.20 Earnings per share

The Group presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit orloss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstandingduring the period. where there are shares that could potentially affects the numbers of share issued, those shares areconsidered in calculating the diluted earnings per share. There are currently no share that could potentially dilute the totalissued shares.

2.21 Segment reporting

An operating segment is a component of the Group engaged in business activities from which it can earn revenues, whoseoperating results are regularly reviewed by the Group's Executive [Management/Board] in order to make decisions aboutresources to be allocated to segments and assessing segment performance. The Group’s identification of segments andthe measurement of segment results is based on the Group’s internal reporting to management.

2.22 Fiduciary activities

The Group acts as trustees and in other fiduciary capacities through Zenith Pension Custodians that result in the holding orplacing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and incomearising thereon are excluded from these financial statements, as they are not assets of the Group.

2.23 Discontinued operations

A discontinued operation is a component of the Group's business that represents a separate major line of business or ageographical area of operations that has been disposed of or is held for sale or distribution, or is a subsidiary acquiredexclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operationmeets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, thecomparative statement of comprehensive income is re-presented as if the operation had been discontinued from the start ofthe comparative year.

2.24 Non-current assets held for sale or distribution

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily throughsale or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately beforeclassification as held for sale or distribution, the assets, or components of a disposal group, are re-measured in accordancewith the Group's accounting policies. Thereafter generally, the assets, or disposal group, are measured at the lower of theircarrying amount and fair value less costs to sell. Any impairment loss on a disposal group first is allocated to goodwill, andthen to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to financial assets and deferredtax assets, which continue to be measured in accordance with the Group's accounting policies. Impairment losses on initialclassification as held for sale or distribution and subsequent gains and losses on re-measurement are recognized in profitor loss. Gains are not recognized in excess of any cumulative impairment loss.

Intangible assets and property and equipment once classified as held for sale or distribution are not amortized ordepreciated. In addition, equity accounting of equity-accounted investees ceases once classified as held for sale ordistribution.


ZENITH BANK PLC


3. Risk management

3.1 Enterprise Risk Management

The Zenith Bank Group’s adopts an integrated approach to risk management by bringing all risks together under a limitednumber of oversight functions. The Group addresses the challenge of risks comprehensively through the Enterprise RiskManagement (ERM) Framework by applying practices that are supported by a governance structure consisting of boardlevel and executive management committees.

As part of its risk management policy, the Group segregates duties between market facing business units and riskmanagement functions while management is governed by well-defined policies which are clearly communicated across theGroup.

Risk related issues are taken into consideration in all business decisions and the Group continually strives to maintain aconservative balance between risk and revenue consideration. Risk culture and education is on the ascendancy across thegroup.

3.1.1 Risk Management Philisophy/Strategy

The group considers sound risk management practise to be the foundation of a long lasting financial institution.

The group continues to adopt a holistic and intergrated approach to risk management and therefore, brings all riskstogether under one or a limited number of oversight functions.

Risk management is a shared responsibility.Therefore the Group aims to build a shared perspective on risks that isgrounded in consensus.

There is clear segregation of duties between market facing business units and risk management functions.

Risk Management is governed by well defined policies which are clearly communicated across the Group.

Risk related issues are taken into consideration in all business decisions. The Group shall continually strive tomaintain a conservative balance between risk and revenue consideration.

3.1.2 Risk Appetite

The Group's risk appetite is reviewed by the Board of Directors annually, at a level that minimizes erosion of earnings orcapital due to avoidable losses or from frauds and operational inefficiencies. This reflects the conservative nature of ZenithGroup as far as risk taking is concerned.

The Group’s risk appetite describes the quantum of risk that it would assume in pursuit of its business objectives at anypoint in time. For the Group, it is the core instrument used in aligning its overall corporate strategy, its capital allocation andrisks.

The Group sets tolerance limits for identified key risk indicators (“KRIs”), which serve as proxies for the risk appetite foreach risk area and business/support unit. Tolerance levels for KRIs are jointly defined and agreed upon by thebusiness/support units and are subject to annual reviews.

3.1.3 Risk Management Approach

The Group addresses the challenge of risks comprehensively through an enterprise-wide risk management framework anda risk governance policy by applying leading practices that is supported by a robust governance structure consisting ofboard level and executive management committees. The Board drives the risk governance and compliance process throughits committees. The audit commitee provides oversight on the systems of internal control, financial reporting andcompliance. The Board credit commitee reviews the credit policies and approves all loans above the defined limits forExecutive Management. The Board Risk Committee sets the risk philosophy, policies and strategies as well as providesguidance on the various risk elements and their management. The Board Risk Control Functions are supported by variousmanagement committees and sub committees (Global Credit commitee and Management Risk committee) that hep itdevelop and implement various risk strategies. The Global Credit commitee manages the credit approval anddocumentation activities. It ensures that the credit policies and procedures are aligned with the Group's business objectivesand strategies. The Management Risk committee drives the management of the financial risks (Market, Liquidity and CreditRisk), operational risks as well as strategic and reputational risks.


ZENITH BANK PLC


In addition, Zenith Group manages its risks in a structured, systematic and transparent manner through a global risk policywhich embeds comprehensive risk management processes into the organisational structure and risk measurement andmonitoring activities. This structure ensures that the Group’s overall risk exposures are within the thresholds set by theBoard.

The key features of the Group’s risk management policy are: The Board of Directors provides overall risk management direction and oversight. The Group’s risk appetite is approved by the Board of Directors. Risk management is embedded in the Group as an intrinsic process and is a core competence of all its

employees. The Group manages its credit, market, operational and liquidity risks in a co-ordinated manner within the

organisation. The Group’s risk management function is independent of the business divisions. The Group’s internal audit function reports to the Board Audit Committee and provides independent validation of

the business units’ compliance with risk policies and procedures and the adequacy and effectiveness of the riskmanagement framework on an enterprise-wide basis.

The Group continually modifies and enhances its risk management policies and systems to reflect changes in markets,products and international best practices. Training, individual responsibility and accountability, together with a disciplinedand cautious culture of control, is an intergral part of the Group’s management of risk.

The Board of Directors ensures strict compliance with relevant laws, rules and standards issued by the industry regulatorsand other law enforcement agencies, market conventions, codes of practices promoted by industry associations andinternal policies.

The compliance function, under the leadership of the Chief Compliance Officer of the Bank has put in place a robustcompliance framework, which includes:

Comprehensive compliance manual detailing the roles and responsibilities of all stakeholders in the complianceprocess,

Review and analysis of all relevant laws and regulations, which are adopted into policy statements to ensurebusiness is conducted professionally;

Review of the Bank's Anti Money Laundering Policy in accordance with changes in the Money LauderingProhibition Act 2011 and Anti Terrorism Act 2011 as amended;

Incorporation of new guidelines in the Bank's Know Your Customer policies in line with the increasing globaltrend as outlined in the Central Bank of Nigeria's Anti Money Laundering/Combating Finance of TerrorismCompliance Manual.

The Group's culture emphasizes high standard of ethical behaviour at all levels of the Bank. Therefore the Bank's board ofdirectors promotes sound organisation.

3.1.4 Methodology for Risk Rating

The risk management strategy is to develop an integrated approach to risk assessments, measurement, monitoring andcontrol that captures all risks in all aspects of the Group’s activities.

All activities in the Group have been profiled and the key risk drivers and threats in them identified. Mitigation and controltechniques are then determined in tackling each of these threats. These techniques are implemented as risk policies andprocedures that drive the strategic direction and risk appetite as specified by the board. Techniques employed in meetingthese objectives culminate in the following roles for the risk control functions of the Group:

Develop and implement procedures and practices that translate the board's goals, objectives, and risk tolerancesinto operating standards that are well understood by staff.

Establish lines of authority and responsibility for managing individual risk elements in line with the Board’s overalldirection.

Risk identification, measurement, monitoring and control procedures. Establish effective internal controls that cover each risk management process. Ensure that the group’s risk management processes are properly documented. Create adequate awareness to make risk management a part of the corporate culture of the Group. Ensure that risk remains within the boundaries established by the Board. Ensure that business lines comply with risk parameters and prudent limits established by the Board.

The CBN Risk Management Guidelines prescribes quantitative and qualitative criteria for the identification of significantactivities and sets a threshold of contributions for determining significant activities in Bank and its subsidiaries. This practiceis essentially to drive the risk control focus of financial institutions.


ZENITH BANK PLC


Zenith Bank applies a mix of qualitative and quantitative techniques in the determination of its significant activities under aprescribed broad headings. The criteria used in estimating the materiality of each activity is essentially based on thefollowing:

The strategic importance of the activity and sector. The contribution of the activity/sector to the total assets of the Bank. The net income of the sector. The risk inherent in the activity and sector.

Risk Management structures and processes are continually reviewed to ensure, their adequacy and appropriateness for thegroup’s risk and opportunities profile as well as bringing them up to date with changes in strategy, business environment,evolving thoughts and trends in risk management.

3.2 Credit Risk

Credit risk is the risk of a financial loss if an obligor does not fully honour its contractual commitments to the Group.Obligors may be borrowers, issuers, counterparties or guarantors. Credit risk is the most significant risk facing the Bank inthe normal course of business. The Bank is exposed to credit risk not only through its direct lending activities andtransactions but also through commitments to extend credit, letters of guarantee, letters of credit, securities purchasedunder reverse repurchase agreements, deposits with financial institutions, brokerage activities, and transactions carrying asettlement risk for the Bank such as irrevocable fund transfers to third parties via electronic payment systems.

The Group has robust credit standards, policies and procedures to control and monitor intrinsic and concentration risksthrough all credit levels of selection, underwriting, administration and control. Some of the policies are:

Credit is only extended to suitable and well identified customers and never where there is any doubt as to theethical standards and record of the intending borrower.

Exposures to any industry or customer will be determined by the regulatory guidelines, clearly defined internalpolicies, debt service capability and balance sheet management guidelines.

Credit is not extended to customers where the source of repayment is unknown or speculative, and also wherethe destination of funds is unknown. There must be clear and verifiable purpose for the use of the funds.

Credit is not given to a customer where the ability of the customer to meet obligations is based on the mostoptimistic forecast of events. Risk considerations will always have priority over business and profit considerations

The primary source of repayment for all credits must be from an identifiable cash flow from the counterparty’snormal business operations or other financial arrangements. The realization of security remains a fall backoption.

A pricing model that reflects variations in the risk profile of various credits to ensure that higher risks arecompensated by higher returns is adopted.

All insiders’ related credits are limited to regulatory and strict internal limits and are disclosed as required. The consequences for non-compliance with the credit policy and credit indiscipline are communicated to all staff

and implemented.

3.2.1 Credit Metrics and Measurement Tools

Zenith Bank and its subsidiaries have devoted resources and harness its credit data into developing models to improve thedetermination of economic and financial threats due to credit risk. Before a sound and prudent credit decision can be taken,the credit risk engendered by the borrower or counterparty must be accurately assessed. This is the first step in processingcredit applications. As a result some key factors are considered in credit risk assessment and measurement:

1. Adherence to the strict credit selection criteria which includes defined target market, credit history, the capacity andcharacter of customers.

2. Credit rating of obligor

3. The likelihood of failure to pay over the period stipulated in the contract.

4. The size of the facility in case default occurs.

5. Estimated Rate of Recovery which is a measure of the portion of the debt that can be regained through freezing of assetsand collateral should default occur.

3.2.2 Credit Rating Tools

The principal objective of the credit risk rating system is to produce a reliable assessment of the credit risk to which theGroup is exposed. As such, all loans and indirect credits such as guarantees and bonds as well as treasury investmentsundergo a formal credit analysis process that would ensure the proper appraisal of the facility.


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(a) Loans and advances and amounts due from banks

Each individual borrower is rated based on an internally developed rating model that evaluates risk based on financial,qualitative and industry specific inputs. The associated loss estimate norms for each grade have been developed based onthe experience of the Bank and its various subsidiaries.

In order to allow for a meaningful distribution of exposures across grades with no excessive concentrations on the Group'sborrower-rating and its facility-rating scale, the Group maintains the under listed rating grade which is applicable to bothnew and existing customers.

Zenith Group’s internal rating:

Zenith Group Rating Description of the grade Equivalent of externalrating

AAA Investment Risk (Extremely Low Risk) AAAAA Investment Risk (Very Low Risk) AAA Investment Risk (Low Risk) A

BBB Upper Standard Grade (Acceptable Risk) BBBBB Lower Standard Grade (Moderately High Risk) BBB Non Investment Grade (High Risk) B

CCC Non Investment Grade (Very High Risk) CCCCC Non Investment Grade (Extremely High Risk) CCC Non Investment Grade (High Likelihood of Default) CD Non Investment Grade (Lost) D

Unrated Unrated Unrated

The credit rating system seeks to achieve the foundation level of the internal ratings based approach under Basle II,through continuous validation exercises over the years.

(b) Other debt instruments

With respect to other debt instruments, the Group takes the following into consideration in the management of theassociated credit risk:

External ratings of such instruments/institutions by rating agencies like Fitch; Standard & Poor’s; Agusto & Co.etc.

Internal and external research and market intelligence reports Regulatory agencies reports

In addition to the above, we have put in place a conservative limits structure which is monitored from time to time in order tolimit our risk exposures on these securities.

Control mechanisms for the credit risk rating system

Zenith’s credit risk rating system is reviewed periodically to confirm that the rating criteria and procedures are appropriategiven the current portfolio and external conditions. Hence, in accordance with the Groups model risk policy, all models thatmaterially impact the risk rating process are reviewed.

Furthermore, the ratings accorded to customers are regularly reviewed, incorporating new financial information availableand the experience in the development of the banking relationship. The regularity of the reviews increases in the case ofclients who reach certain levels in the automated warning systems. The rating system is currently undergoing externalreview with a view to enhancing its robustness.

3.2.3 Credit Processes

Zenith operates a Centralised Credit Approval Process System. Credits are originated from the branches/business groupsand subjected to reviews at various levels before presentation to the Global Credit Committee for approvals, and includingall documents and information defined for the proper assessment and decision of Credit. All credit presented for approvalare required to be in conformity with the documented and communicated Risk Acceptance Criteria(RAC).


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As part of credit appraisal process, the Group will have to satisfy itself in the following areas:a) Credit assessment of the borrower’s industry, and macro economic factors.b) The purpose of credit and source of repayment.c) The track record / repayment history of borrower.d) Assess/evaluate the repayment capacity of the borrower.e) The Proposed terms and conditions and covenants.f) Adequacy and enforceability of collaterals.g) Approval from appropriate authority.

3.2.4 Group Credit Risk Management

Zenith's dynamic and proactive approach in managing credit risk is a key element in achieving its strategic objective ofmaintaining and further enhancing its asset quality and credit portfolio risk profile. The conservative, prudent and well-established credit standards, policies and procedures, risk methodologies and framework, solid structure and infrastructure,risk monitoring and control activities enable the Group to deal with the emerging risks and challenges with a high level ofconfidence and determination.

The framework for Credit Risk at Zenith is well defined and institutionally predicated on: Clear tolerance limits and risk appetite set at the Board level, well communicated to the business units and

periodically reviewed and monitored to adjust as appropriate. Well-defined target market and risk asset acceptance criteria. Rigorous financial, credit and overall risk analysis for each customer/transaction. Portfolio quality examined on regular basis according to key performance indicators mechanism and periodic

stress testing. Concentrations together with mitigation strategies are continuously assessed. Early warning system is continually validated and modified to ensure proper functioning for risk identification. Systematic and objective credit risk rating methodologies that are based on quantitative, qualitative and expert

judgment. Systematic credit limits management enabling the Bank to monitor its credit exposure on daily basis at country,

borrower, industry, credit risk rating and credit facility type levels. Solid documentation and collateral management process with proper coverage and top-up triggers and follow-

ups. Annual and interim individual credit reviews to ensure detection of weakness signs or warning signals and

considering proper remedies.

Our rigorous credit processes are supplemented by sectoral portfolio reviews focused on countries, regions or specificindustries as well as multiple stress testing scenarios.

These are intended to identify any inherent risks in the portfolios resulting from changes in market conditions and aresupplemented by independent reviews from our Group Internal Audit.

Additionally, the Group continues to upgrade and fine-tune the above in line with the developments in the financial servicesindustry environment and technology.

3.2.5 Group Credit Risk Limits

The Group applies credit risk limits, among other techniques in managing credit risk. This is the practice of stipulating amaximum amount that the individual or counterparty can obtain as loan. Internal and regulatory limits are strictly adheredto.Through this, the Group not only protects itself, but also in a sense, protects the counterparty from borrowing more thanthey are capable of paying.

The Group continues to focus on its concentration and intrinsic risks and further manage them to a more comfortable level.This is very important due to the serious risk implications that intrinsic and concentration risk pose to the Group. A thoroughanalysis of economic factors, market forecasting and prediction based on historical evidence is used to mitigate thecrystallization of these risks.

The Group has in place various portfolio concentration limits( which is subject to periodic review) .These limits are closelymonitored and reported on from time to time.


ZENITH BANK PLC


The Group’s internal credit approval limits for the various authorities levels are as indicated below.

Zenith Group Rating Approval limit (% of Shareholders' Fund)

Board Credit Committee N7 billion and above (Not exceeding 20% of Total Shareholders’ funds)Global Credit Committee Below N7 billion

These internal approval limits are set and approved by the Group Board and are reviewed regularly as the state of affairs ofthe Group and the wider financial environment demands.

3.2.6 Group Credit Risk Monitoring

The Group’s exposures are continuously monitored through a system of triggers and early-warning signals aimed atdetecting symptoms which could result in deterioration of credit risk quality. The triggers and early-warning systems aresupplemented by facility utilisation and collateral valuation monitoring together with a review of upcoming credit facilityexpiration and market intelligence to enable timely corrective action by management. The results of the monitoring processare reflected in the internal rating process in a quarterly review activity.

Credit risk is monitored on an ongoing basis with formal weekly,monthly and quarterly reporting to ensure seniormanagement awareness of shifts in credit quality and portfolio performance along with changing external factors such aseconomic and business cycles.

The capabilities of the credit review team is continously being improved in order to improve the facility monitoring activityand assure good quality Risk Assets Portfolio accross the Group.

A specialised and focused loan recovery and workout team handles the management and collection of problem creditfacilities.

3.2.7 (a) Credit Risk Mitigation, Collateral and other Credit Enhancements

The Group’s approach to controlling various risks begins with optimizing the diversification of its exposures. Zenith uses avariety of techniques to manage the credit risk arising from its lending activities.These techniques are set out in the Group'sinternal policies and procedures. They are mainly reflected in the application of various exposure limits: credit concentrationlimits by counterparty and credit concentration limits by industry, country, region and type of financial instrument.Enforceable legal documentation establishes Zenith’s direct, irrevocable and unconditional recourse to any collateral,security or other credit enhancements.

(a) Collateral Security

A key mitigation step employed by the Group in its credit risk management process includes the use of collateral securitiesto secure its loans and advances as alternative sources of repayment during adverse conditions. All major credit facilities toour customers are to be secured and the security instruments and documentations must be perfected and all conditionsprecedent must be met before drawdown or disbursement is allowed. Collateral analysis includes a good description of thecollateral, its value, how the value was arrived at, and when the valuation was made. It is usually necessary to review thepotential adverse changes in the value of collateral security for the foreseeable future.

Collateral securities that are pledged must be in negotiable form and usually fall under the following categories: Real estate, plant and equipment collateral (usually all asset or mortgage debenture or charge) which have to be

registered and enforceable under Nigerian law; Collateral consisting of inventory, accounts receivable, machinery equipment, patents, trademarks, farm

products, general intangibles, etc. These require a security agreement (usually a floating debenture) which hasto be registered and, must be enforceable under Nigerian law;

Stocks and shares of publicly quoted companies; Domiciliation of contracts proceeds; Documents of title to goods such as shipping documents consigned to the order of Zenith Bank or any of its

subsidiaries; and Letter of lien.

Collateral securities are usually valued and inspected prior to disbursement and on a regular basis thereafter until fullrepayment of the exposure. We regularly conduct a review of all collateral documentation in respect of all credits in theBank and specific gaps in the collateral documentation are advised to the Lending Group/Zones/Branch for appropriateaction and follow-up. Borrowers are required to confirm adherence to covenants including confirmation of collateral valueson a periodic basis, which are used by the Bank to provide early warning signals of collateral value deterioration. Periodicinspections of physical collateral are performed where appropriate and where reasonable means of doing so are available.


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The type and size of collateral held as security for financial assets other than loans and advances is usually a function ofthe nature of the instrument. Our debt securities, treasury and other eligible bills are normally unsecured but our comfort ison the issuer’s credit rating which is the Federal Government of Nigeria (FGN).

Details of collateral held and their carrying amounts as at 31 December 2014 are as follows:

In millions of Naira Group Bank

Totalexposure

Value ofcollateral

Totalexposure

Value ofcollateral

Secured against real estate 215,506 199,745 214,165 198,361Secured by shares of quoted companies 4,814 2,571 4,814 2,571Cash Collateral, lien over fixed and floating assets 1,016,830 696,287 867,594 569,264Unsecured 521,185 - 519,008 -

1,758,335 898,603 1,605,581 770,196

Details of collateral held and their carrying amounts as at 31 December 2013 are as follows:

In millions of Naira Group Bank

Totalexposure

Value ofcollateral

Totalexposure

Value ofcollateral

Secured against real estate 177,379 137,292 152,379 127,292Secured by shares of quoted companies 32,482 10,652 17,482 5,652Cash Collateral, lien over fixed and floating assets 860,299 340,038 810,299 325,038Unsecured 205,962 - 168,218 -

1,276,122 487,982 1,148,378 457,982

(b) Balance Sheet Netting Arrangements

Risk reduction by way of current account set-off is recognised for exposures to highly rated and creditworthy customers.Customers are required to enter into formal agreements giving Zenith Bank Plc the unfettered right to set-off gross creditand debit balances in their nominated accounts to determine the Groups net exposure. Cross-border set-offs are notpermitted.

(c) Guarantees and Standby Letters of Credit

Guarantees and Standby Letters of Credit are considered to carry about the same level of credit risk as loans andadvances. And in accordance with the Group’s credit policies, banks and creditworthy companies and individuals with highnet worth are accepted as guarantor, subject to credit risk assessment. Furthermore Zenith Bank Plc only recognisesunconditional irrevocable guarantees or standby letters of credit provided they are not related to the underlying obligor.

3.2.7 (b) Maximum Exposure to Credit Risk Before Collateral Held or Credit Enhancements

The Group's maximum exposure to credit risk at 31 December 2014 and 2013 respectively, is represented by the netcarrying amounts of the financial assets, with the exception of financial and other guarantees issued by the Group for whichthe maximum exposure to credit risk is represented by the maximum amount the Group would have to pay if the guaranteesare called on (refer note 42 Contingent liabilities and commitments).

3.2.8 Concentration of Risks of Financial Assets with Credit Risk Exposure

The Group monitors concentrations of credit risk by geographical location and by industry sector. An analysis ofconcentrations of credit risk at 31 December 2014 and 2013 respectively for loans and advances to customers andamounts due from banks, is set out below:


ZENITH BANK PLC


(a) Geographical sectors

The following table breaks down the Group’s main credit exposure at their gross amounts ( "Due from banks" at carryingamount), as categorised by geographical region at 31 December 2014 and 2013 respectively. For this table, the Group hasallocated exposures to regions based on the region of domicile of our counterparties.

In millions of Naira Group Bank 31 December 2014 Due from

banksLoans and

advances tocustomers

Total Due frombanks

Loans andadvances tocustomers

Total

Nigeria 232,188 1,605,581 1,837,769 147,923 1,605,581 1,753,504Rest of Africa 12,039 79,483 91,522 - - -Outside Africa 262,341 73,271 335,612 322,216 - 322,216

506,568 1,758,335 2,264,903 470,139 1,605,581 2,075,720

In millions of Naira Group Bank 31 December 2013 Due from

banksLoans and


Total Due frombanks


Total

Nigeria 153,887 1,148,378 1,302,265 97,257 1,148,378 1,245,635Rest of Africa 12,039 52,783 64,822 - - -Outside Africa 90,803 74,961 165,764 152,267 - 152,267

256,729 1,276,122 1,532,851 249,524 1,148,378 1,397,902

(b) Industry sectors

In millions of Naira Group Bank 2014 2013 2014 2013





Agriculture 112,616 64,696 82,453 60,722Oil and gas 389,926 193,883 383,416 173,143Consumer Credit 25,943 30,141 10,578 29,901Manufacturing 298,831 287,636 290,205 262,848Real estate and construction 103,656 84,709 100,439 77,101Finance and Insurance 35,946 25,667 32,928 22,463Government 151,489 113,801 151,383 102,572Power 69,449 49,696 52,874 44,938Other public utilities 6,913 28,208 25 28,192Transportation 94,714 93,183 75,445 86,712Communication 150,515 186,176 146,947 168,041Education 5,700 3,578 4,652 3,185General Commerce 108,921 72,058 80,759 64,573Others 203,716 42,690 193,477 23,987

1,758,335 1,276,122 1,605,581 1,148,378


ZENITH BANK PLC


3.2.9 Credit quality

In millions of Naira Group Bank At 31 December 2014 Due from

banksLoans and


Financialguarantee

Due frombanks


Financialguarantee

Neither past due norimpaired

506,568 1,723,497 627,458 470,139 1,575,358 603,520

Past due but not impaired - 4,068 - - 3,816 -ImpairedIndividually impaired - 11,862 - - 7,922 -Collectively impaired - 18,908 - - 18,485 -

Gross 506,568 1,758,335 627,458 470,139 1,605,581 603,520Impairment allowanceSpecific impairment - (10,065) - - (7,480) -Collective impairment * - (18,763) - - (17,851) -

506,568 1,729,507 627,458 470,139 1,580,250 603,520

In millions of Naira Group Bank At 31 December 2013 Due from

banksLoans and


Financialguarantee

Due frombanks


Financialguarantee

Neither past due norimpaired

256,729 1,237,058 648,847 249,524 1,112,512 632,167

Past due but not impaired - 8,147 - - 7,889 -ImpairedIndividually impaired - 13,843 - - 11,021 -Collectively impaired - 17,074 - - 16,956 -

Gross 256,729 1,276,122 648,847 249,524 1,148,378 632,167Impairment allowanceSpecific impairment - (7,972) - - (5,600) -Collective impairment * - (16,795) - - (16,219) -

256,729 1,251,355 648,847 249,524 1,126,559 632,167

*Impaired loans that are not individually significant are included in the collective impairment.

In millions of Naira

3.2.9.1 Non-Performing Loans by Industry At 31 December

Group Bank 2014 2013 2014 2013

Agriculture 2,161 239 2,114 202Oil and Gas 146 1,686 60 1,642Capital Market 4,769 1,080 4,769 -Consumer Credit 2,866 61 2,866 -Manufacturing 2,660 2,107 1,061 1,897Real Estate and Construction 4,869 6,377 4,244 5,588Finance and Insurance 75 7,941 6 7,868Government 174 210 174 210Power 1,833 1,667 1,833 1,573Other Public Utilities 1 209 1 209Transportation 21 23 21 23Communication 1,090 945 1,009 929Education 107 1,830 106 1,830General Commerce/Trading 4,340 4,937 2,488 4,754Others 5,658 1,605 5,655 1,252

30,770 30,917 26,407 27,977


ZENITH BANK PLC


3.2.9.2 Non-Performing Loans by GeographyAt 31 December

Group Bank 2014 2013 2014 2013

South South 926 385 926 385South West 23,018 25,545 23,018 25,545South East 488 839 488 839North Central 1,195 1,186 1,195 1,186North West 96 11 96 11North East 684 11 684 11Rest of Africa 4,363 2,896 - -Outside Africa - 44 - -

30,770 30,917 26,407 27,977

(a) Geographical Sectors

The following table breaks down the Group’s main credit exposure at their carrying amounts, as categorised bygeographical region at 31 December 2014 together with prior period comparatives. For this table, the Group has allocatedexposures to regions based on the domicile region of our counterparties.

Group Bank At 31 December (N'millions) Loans and


Loans andadvances to

customers


customers


customers2014 2013 2014 2013

South South 108,445 70,109 108,445 70,109South West 1,352,177 974,519 1,352,177 974,519South East 43,350 17,294 43,350 17,294North Central 73,793 57,689 73,793 57,689North West 8,073 7,874 8,073 7,874North East 19,743 20,893 19,743 20,893Rest of Africa 79,483 52,783 - -Outside Africa 73,271 74,961 - -

1,758,335 1,276,122 1,605,581 1,148,378

All other financial assets are neither past due nor impaired, except other assets. NGN 6.61 billion of financial assets whichare neither past due nor impaired have been renegotiated (2013: NGN 3.05 billion).


ZENITH BANK PLC



(a) Credit portfolio neither past due nor impaired

The credit quality of the portfolio of loans and advances and amounts due from banks that were neither past due norimpaired can be assessed by reference to the internal rating system adopted by the Group.

Group Bank At 31 December 2014 Due from

banksLoans and


Due frombanks


AAA 506,568 253,665 470,139 231,628AA to A - 729,064 - 665,727BBB to BB - 622,512 - 568,431Below B - 28,309 - 25,849Unrated - 124,785 - 113,946

506,568 1,758,335 470,139 1,605,581

Group Bank At 31 December 2013 Due from

banksLoans and


Due frombanks


AAA 256,729 814,467 249,524 734,057AA to A - 156,932 - 123,644BBB to BB - 193,838 - 189,669Below B - 35,281 - 32,540Unrated - 36,540 - 32,602

256,729 1,237,058 249,524 1,112,512

The credit quality of cash and balances with central banks, treasury bills, investment securities and assets pledged ascollateral that were neither past due nor impaired can also be assessed by reference to the internal rating system adoptedby the Group.

Group Bank At 31 December2014

Cash andbalances

with centralbanks

Treasurybills

Investmentsecurities

Assetspledged ascollateral

Cash andbalances

with centralbanks

Treasurybills



AAA 752,580 295,397 186,544 151,746 728,291 253,414 79,469 151,746AA to A - - 13,535 - - - 13,363 -BBB to BB - - - - - - - -Below B - - - - - - - -Unrated - - - - - - - -

752,580 295,397 200,079 151,746 728,291 253,414 92,832 151,746

Group Bank At 31 December 2013 Cash and

balanceswith central

banks

Treasurybills



Cash andbalances

with centralbanks

Treasurybills



AAA 603,851 579,511 292,471 6,930 587,793 565,668 201,869 6,930AA to A - - 10,654 - - - 10,654 -BBB to BB - - - - - - - -Below B - - - - - - - -Unrated - - - - - - - -

603,851 579,511 303,125 6,930 587,793 565,668 212,523 6,930

The credit risk associated with other financial assets that were neither past due nor impaired are considered to be low at 31December 2014 and 2013.


ZENITH BANK PLC



(b) Credit portfolio past due but not impaired

Group Bank


customers


customers


customers


customers2014 2013 2014 2013

N. mil N. mil N. mil N. milPast due up to 30 days 3,228 4,701 3,133 4,601Past due 30 - 60 days 530 894 454 824Past due 60 - 90 days 310 2,552 229 2,464

4,068 8,147 3,816 7,889

(c) Credit rating of past due but not impairedA 3,906 7,974 3,695 7,758BB 162 173 121 131

4,068 8,147 3,816 7,889

(d) Credit portfolio individually impaired

In Millions of Naira

(d) Credit portfolio individually impaired Group Bank


customers


customers


customers


customers2014 2013 2014 2013

N. mil N. mil N. mil N. milGross amountBB 6,103 10,300 5,508 8,530Grade: Below BB 5,759 3,543 2,414 2,491Specific impairment (10,065) (7,972) (7,480) (5,600)

1,797 5,871 442 5,421

Restructuring policy

Loans with renegotiated terms are loans that have been restructured because the Group has made concessions byagreeing to terms and conditions that are more favorable for the customer than the Group has provided initially. The Groupimplements restructuring policy in order to maximize collections opportunities and minimize the risk of default.

The group’s credit committee may from time to time grant approval for restructuring of certain facilities due to the followingreasons:

i. Where the execution of the loan purpose and the repayment is no longer realistic in light of new cash flows.

ii, To avoid unintended default arising from adverse business conditions .

iii. To align loan repayment with new pattern of achievable cash flows.

iv. Where there are proven cost over runs that may significantly impair the project repayment capacity.

v. Where there is temporary downturn in the customer’s business environment .

vi. Where the customer’s going concern status is NOT in doubt or threatened.

The revised terms of restructured facilities usually include extended maturity, changing timing of interest payments andamendments to the terms of the loan agreement.


ZENITH BANK PLC


Write-off policy

The group writes off a loan balance when the Group’s credit department determines that the loan is uncollectable and hadbeen declared delinquent and subsequently classified as lost. This determination is made after considering informationsuch as the continuous deterioration in the customer’s financial position, such that the customer can no longer pay theobligation, or that proceeds from the collateral will not be sufficient to pay back the entire exposure. Board approval isrequired for such write-off. For insider related, CBN approval is required. The loan recovery department continues with itsrecovery efforts and any loan subsequently recovered is treated as other income.

3.3 Market risk

Market risk is the risk of potential losses in both on and off balance-sheet positions arising from movements in marketprices. Market risks can arise from adverse changes in interest rates, foreign exchange rates, equity prices, commodityprices and other relevant factors such as Market Volatilities.

The Group undertakes activities which give rise to some level of market risks exposures. The objective of market riskmanagement activities is to continually identify, manage and control market risk exposure within acceptable parameters,while optimizing the return on risks taken.

3.3.1 Management of market risk

The Group has an independent Market Risk Management unit which assesses, monitors, manages and reports on marketrisk taking activities across the group. We have continued to enhance our Market Risk Management Framework. Theoperations of the unit is guided by the mission of "inculcating enduring market risk management values and culture, with aview to reducing the risk of losses associated with market risk-taking activities, and optimizing risk-reward trade-off.”

The Group's market risk objectives, policies and processes are aimed at instituting a model that objectively identifies,measures and manages market risks in the Group and ensure that:

1. The individuals who take or manage risk clearly understand it.

2. The Group's risk exposure is within established limits.

3. Risk taking decisions are in line with business strategy and objectives set by the Board of Directors.

4. The expected payoffs compensate for the risks taken.

5. Sufficient capital, as a buffer, is available to take risk.

The Group proactively manages its Market risk exposures in both the trading and non-trading books within the acceptablelevels.

The Group's Market Risks exposures are broadly categorised into:

(i) Trading Market Risks - These are risks that arise primarily through trading activities and Market Making activities. Theseinclude position taking in foreign exchange and fixed income securities (Bonds and Treasury Bills).

(ii) Non Trading Market Risks -These are risks that arise from assets and liabilities that are usually on our books for a longerperiod of time, but where the Intrinsic value is a function of the movement of financial market parameter.


ZENITH BANK PLC


The table below sets out the allocation of assets and liabilities subject to market risk between trading and non-tradingportfolis

'In millions of NairaGroup

At 31 December 2014 At 31 December 2013Note Carrying

amountTrading Non-trading Carrying

amountTrading Non-trading

Cash and balances with centralbanks

16752,580 - 751,418 752,580 - 752,580

Treasury bills 295,397 1,162 294,235 579,511 - 579,511Assets pledged as collateral 18 151,746 - 151,746 6,930 - 6,930Due from other banks 19 506,568 - 506,568 256,729 - 256,729Loans and advances 21 1,729,507 - 1,729,507 1,251,355 - 1,251,355Investment securities 22 200,079 - 200,079 303,125 - 303,125Derivative assets 20 17,408 16,896 512 2,681 - 2,681

BankAt 31 December 2014 At 31 December 2013

Carryingamount

Trading Non-trading Carryingamount

Trading Non-trading


16728,291 - 728,291 587,793 - 587,793

Treasury bills 253,414 1,162 252,252 565,668 - 565,668Assets pledged as collateral 18 151,746 - 151,746 6,930 - 6,930Due from other banks 19 470,139 - 470,139 249,524 - 249,524Loans and advances 21 1,580,250 - 1,580,250 1,126,559 - 1,126,559Investment securities 22 33,003 - 33,003 24,375 - 24,375Derivative assets 20 16,896 16,896 - - - -

3.3.2 Measurement of Market Risk

The Group adopts Non-VAR approach for quantitative measurement and control of market risks in both trading and nontrading books. The Non -VAR measurements includes: Duration;Factor Sensitivities (Pv01), Stress Testing, AggregateOpen Position etc. The measured risks are therefore monitored against the pre-set limits on a daily basis. All exceptions areinvestigated and reported in line with internal policies and guidelines.

Limits are sets to reflect the risk appetite that is approved by the Board of Directors.These limits are reviewed, at least,annually or at a more frequent interval. Some of the limits include; Net Open Position (NOP- for foreign exchange);Aggregate Control Limits (for Securities); Management Action Trigger (MAT); Duration; Factor Sensitivities (Pv01);Permitted Instrument and Tenor Limits; Holding Period and Off Market Rate Tolerance limit.

Zenith Group generally does not offer very complex derivative products. However, with the setting up of Financial MarketQuotation Plc (FMDQ), it is expected that more sophisicated products will be introduced into the market. We will ensure thatadequate capacity (both systems and training/knowledge base) are in place to handle these products as at when they areintroduced. The overall size of the trading book is maintained at a very manageable size.

3.3.3 Foreign exchange risk

Fluctuations in the prevailing foreign currency exchange rates can affect the groups financial position and cash flows - 'On'and 'Off' Balance Sheet. The Group manages part of the Foreign exchange risks through basic derivatives products andhedges (such as FX, fwd and swap). The risk is also managed by ensuring that all risk taken Group operate withinapproved limits. In addition to adhenrence to regulatory limits, Zenith Group established various Internal limits (such asVAR, overall Overnight and Intra-day positions), Dealer limits, as well as individual currency among others limits which aremonitored by the Market Risk Department on a regular basis. These limits are set with the aim of minimizing the Group'srisk exposures to exchange rates volatilities to an acceptable level. The Group's transactions are carried out mainly in five(5) foreign currencies with a significant percentage of transactions involving US Dollars.


ZENITH BANK PLC


(a) Group

The table below summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December 2014 and 31December 2013. Included in the table are the Group’s financial instruments at carrying amounts (except for loans andadvances to customers and other assets which are shown at thier gross amount), categorised by currency.

In millions of NairaAt 31 December 2014 Naira Dollar GBP Euro Others TotalAssetsCash and balances with centralbanks 303,262 397,743 5,693 29,492 16,390 752,580Treasury bills 184,008 31,578 - - 79,811 295,397Assets pledged as collaterals 151,746 - - - - 151,746Due from other banks 286,050 203,660 - 4,547 12,311 506,568Derivative assets - 17,408 - - - 17,408Loans and advances tocustomers (gross) 994,377 692,352 199 6,531 64,876 1,758,335Investment securities 160,344 33,014 - - 6,721 200,079

2,079,787 1,375,755 5,892 40,570 180,109 3,682,113

LiabilitiesCustomer's deposits 1,527,756 881,510 4,100 14,403 109,542 2,537,311Derivative liabilities - 6,073 - - - 6,073On-lending facilities 68,344 - - - - 68,344Borrowings - 198,066 - - - 198,066Debt securities issued - 92,932 - - - 92,932

1,596,100 1,178,581 4,100 14,403 109,542 2,902,726

Net on-balance sheet position 483,687 197,174 1,792 26,167 70,567 779,387

In millions of NairaAt 31 December 2013 Naira Dollar GBP Euro Others TotalAssetsCash and balances with centralbanks 426,581 119,433 38,064 19,750 23 603,851Treasury bills 565,668 - 13,789 - 54 579,511Assets pledged as collaterals 6,930 - - - - 6,930Due from other banks 152,267 81,201 128 2,011 21,122 256,729Loans and advances tocustomers (gross) 921,643 296,435 578 - 57,466 1,276,122Investment securities 212,523 40,249 - 49,729 624 303,125

2,285,612 537,318 52,559 71,490 79,289 3,026,268

LiabilitiesCustomer's deposits 1,831,245 424,241 5,852 13,300 2,117 2,276,755On-lending facilities 59,528 - - - - 59,528Borrowings - 60,150 - - - 60,150

1,890,773 484,391 5,852 13,300 2,117 2,396,433

Net on-balance sheet position 394,839 52,927 46,707 58,190 77,172 629,835

The Group’s exposure to foreign currency risk is largely concentrated in the US Dollar. Movement in exchange rate betweenthe US Dollar, and the Nigerian Naira affects reported earnings through revaluation gain or loss and statement of financialposition size through increase or decrease in the revalued amounts of assets and liabilities denominated in US Dollars.

The table below shows the impact on the Group’s profit and statements of financial position size if the exchange ratebetween the US Dollars, and Nigerian Naira had increased or decreased by 10%, with all other variables held constant.

2014 2013

US Dollar effect of 10% up or (down) movement on profit before tax and balance sheetsize (In millions of Naira)

16,369 11,577


ZENITH BANK PLC


(b) Bank

The table below summarizes the bank’s exposure to foreign currency exchange rate risk at 31 December 2014 and 31December 2013. Included in the table are the Banks’s financial instruments at carrying amounts, categorised by currency.

In millions of NairaAt 31 December 2014 Naira Dollar GBP Euro Others TotalAssetsCash and balances with centralbanks 308,437 387,006 5,054 27,647 147 728,291Treasury bills 253,414 - - - - 253,414Assets pledged as collaterals 151,746 - - - - 151,746Due from other banks 338,329 131,346 - 464 - 470,139Derivative assets - 16,896 - - - 16,896Loans and advances tocustomers (gross) 1,065,892 533,994 199 5,496 - 1,605,581Investment securities 91,872 960 - - - 92,832

2,209,690 1,070,202 5,253 33,607 147 3,318,899

LiabilitiesCustomer's deposit 1,724,404 528,697 3,443 8,718 - 2,265,262Derivative liabilities - 6,073 - - - 6,073On-lending facilities 68,344 - - - - 68,344Borrowings - 198,066 - - - 198,066Debt securities issued - 92,932 - - - 92,932

1,792,748 825,768 3,443 8,718 - 2,630,677

Net on-balance sheet position 416,942 244,434 1,810 24,889 147 688,222


At 31 December 2013 Naira Dollar GBP Euro Others TotalAssetsCash and balances with centralbanks 458,572 96,293 15,431 17,497 - 587,793Treasury bills 565,668 - - - - 565,668Assets pledged as collaterals 6,930 - - - - 6,930Due from other banks 152,267 96,829 - 428 - 249,524Loans and advances tocustomers (gross) 921,643 226,735 - - - 1,148,378Investment securities 212,523 - - - - 212,523

2,317,603 419,857 15,431 17,925 - 2,770,816

LiabilitiesCustomer's deposits 1,831,245 237,526 2,958 8,133 - 2,079,862On-lending facilities 59,528 - - - - 59,528Borrowings - 60,150 - - - 60,150

1,890,773 297,676 2,958 8,133 - 2,199,540

Net on-balance sheet position 426,829 122,181 12,473 9,792 - 571,275

The Bank’s exposure to foreign currency risk is largely concentrated in the US Dollar. Movement in exchange rate betweenthe US Dollar,and the Nigerian Naira affects reported earnings through revaluation gain or loss and statement of financialposition size through increase or decrease in the revalued amounts of assets and liabilities denominated in US Dollars.

The table below shows the impact on the Bank’s profit and statement of financial position size if the exchange rate betweenthe US Dollars, and Nigerian Naira had increased or decreased by 10%, with all other variables held constant.

2014 2013

US Dollar effect of 10% up or (down) movement on profit before tax and balance sheetsize (In millions of Naira)

21,016 3,495

3.3.4 Interest Rate Risk


ZENITH BANK PLC


The Group is exposed to a considerable level of interest rate risk-especially on the banking book (i.e. the risk that the futurecash flows of a financial instrument will fluctuate because of changes in market interest rates). Interest rate was quitevolatile within the year (especially in the Nigerian environment) in various geographical regions where the bank operates.The combined effect of the increase in Monetary Policy Rate (MPR) 13% (from 12%), Foreign Exchange Rate N168 (fromN155), Cash Reserve Ratio (CRR) on Public Deposit 75% (from 50%) and Private deposits 20% (from 15%) by the CentralBank of Nigeria (CBN) resulted in huge jump in the market rates and market volatility. The Monetary Policy rate was movedup twice in Ghana within the year. It was first moved from 16% to 18% in February 2014 and then to 19% in July 2014. Theincrease was aimed at containing inflationary pressures and to realign interest rates in favour of domestic assets. The ratewas largely flat in Gambia, Sierra-Leone and United Kingdom. These changes could have a negative impact on the NetInterest Income, if not properly managed. The Group however, has a significant portion of its liabilities in non-rate sensitiveliabilities. This helps it in minimising the impact of the exposure to interest rate risks. The Group also enjoys some form offlexibility in adjusting both lending and deposits rates to reflect current realities.

(a) Group

The table below summarizes the Group's interest rate gap position:


At 31 December 2014 Note Carryingamount

Ratesensitive

Non ratesensitive

AssetsCash and balances with central banks 16 752,580 336,650 415,930Treasury and other eligible bills (Amortized cost) 295,397 295,397 -Assets pledged as collateral 18 151,746 151,746 -Due from other banks 19 506,568 506,568 -Derivative assets 20 17,408 17,408 -Loans and advances to customers (gross) 27 1,758,335 1,758,335 -Investment securities (Amortized cost and Fair value through OCI) 22 200,079 200,079 -

3,682,113 3,266,183 415,930

LiabilitiesCustomer deposits 30 2,537,311 2,082,611 454,700Derivative liabilities 30 6,073 6,073 -On-lending facilities 32 68,344 68,344 -Borrowings 33 198,066 198,066 -Debt securities issued 34 92,932 92,932 -

2,902,726 2,448,026 454,700

Total interest repricing gap 779,387 818,157 (38,770)

At 31 December 2014 Up to 1month

1 - 3 months 3 - 6 months 6 - 12months

Over 1 year Total ratesensitive

AssetsCash and balances with centralbanks

107,500 - - 229,150 - 336,650

Treasury bills 68,010 141,089 54,823 31,475 - 295,397Assets pledged as collateral 19,756 56,699 21,377 50 53,864 151,746Due from other banks 491,747 6,961 2,100 5,074 686 506,568Derivative assets 1,523 2 12,986 2,897 - 17,408Loans and advances tocustomers (gross)

628,811 111,588 30,161 63,964 923,811 1,758,335

Investment securities (Amortizedcost and Fair value through OCI)

- 33,527 31,715 13,763 121,074 200,079

1,317,347 349,866 153,162 346,373 1,099,435 3,266,183

LiabilitiesCustomer deposits 1,020,568 66,301 1,140 298 994,304 2,082,611Derivative liabilities 1,242 260 4,300 271 - 6,073On-lending facilities - - - - 68,344 68,344Borrowings - 67,255 3,302 1,560 125,949 198,066Debt securities issued - - - - 92,932 92,932

1,021,810 133,816 8,742 2,129 1,281,529 2,448,026

Total interest repricing gap 295,537 216,050 144,420 344,244 (182,094) 818,157


ZENITH BANK PLC



Ratesensitive

Non ratesensitive

AssetsCash and balances with central banks 16 603,851 255,158 348,693Treasury and other eligible bills (Amortized cost) 579,511 579,511 -Assets pledged as collaterals 18 6,930 6,930 -Due from other banks 18 256,729 256,729 -Derivative assets 20 2,681 2,681 -Loans and advances to customers (gross) 21 1,276,122 1,276,122 -Investment securities (Amortized cost and Fair value through OCI) 22 303,125 303,125 -

3,028,949 2,680,256 348,693

LiabilitiesCustomer deposits 30 2,276,755 1,089,012 1,187,743On-lending facilities 35 59,528 59,528 -Borrowings 33 60,150 60,150 -

2,396,433 1,208,690 1,187,743

Total interest repricing gap 632,516 1,471,566 (839,050)

In millions of NairaAt 31 December 2013 Up to 1

month1 - 3 months 3 - 6 months 6 - 12

monthsOver 1 year Total rate

sensitiveAssetsCash and balances with centralbanks

150,400 - - 104,758 - 255,158

Treasury bills 120,740 234,094 216,731 7,946 - 579,511Assets pledged as collateral - - 6,930 - - 6,930Due from other banks 256,729 - - - - 256,729Derivative assets 2,681 - - - - 2,681Loans and advances tocustomers (gross)

496,418 69,133 52,286 74,612 583,673 1,276,122

Investment securities (Amortizedcost and Fair value through OCI)

- 39,384 151 70,755 192,835 303,125

1,026,968 342,611 276,098 258,071 776,508 2,680,256

LiabilitiesCustomer deposits 977,400 94,192 5,282 12,138 - 1,089,012On-lending facilities 1,309 31,804 2,000 1,560 22,855 59,528Borrowings - - - - 60,150 60,150

978,709 125,996 7,282 13,698 83,005 1,208,690

Total interest repricing gap 48,259 216,615 268,816 244,373 693,503 1,471,566

The management of interest risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Group’sfinancial assets and liabilities to various scenarios. Interest rate movement affects reported income by causing an increaseor decrease in net interest income and fair value changes.

The table below shows the impact on the Group’s profit before tax if interest rates on financial instruments held at amortizedcost or at fair value had increased or decreased by 100 basis points, with all other variables held constant.

2014 2013

Effect of 100 basis points movement on profit before tax 7,495 7,122


ZENITH BANK PLC


(b) Bank

The table below summarizes the Bank's interest rate gap position:



Ratesensitive

Non-ratesensitive

AssetsCash and balances with central banks 16 728,291 329,550 398,741Treasury and other eligible bills (Amortized cost) 253,414 253,414 -Assets pledged as collateral 18 151,746 151,746 -Due from other banks 19 470,139 470,139 -Derivative assets 20 16,896 16,896 -Loans and advances to customers (gross) 21 1,605,581 1,605,581 -Investment securities (Amortized cost and Fair value through OCI) 22 92,832 92,832 -

3,318,899 2,920,158 398,741

LiabilitiesCustomer deposits 30 2,265,262 1,861,172 404,090Derivative liabilities 36 6,073 6,073 -On-lending facilities 32 68,344 68,344 -Borrowings 33 198,066 198,066 -Debt securities issued 24 92,932 92,932 -

2,630,677 2,226,587 404,090

Total interest repricing gap 688,222 693,571 (5,349)

In millions of NairaAt 31 December 2014 Up to 1

month1 - 3 months 3 - 6 months 6 - 12

monthsOver 1 year Total rate

sensitiveAssetsCash and balances with centralbanks

98,865 - - 230,685 - 329,550

Treasury bills 60,725 118,775 47,250 26,664 - 253,414Assets pledged as collateral 19,756 71,699 21,377 50 38,864 151,746Due from other banks 455,318 6,961 2,100 5,074 686 470,139Derivative assets 1,523 2 12,474 2,897 - 16,896Loans and advances tocustomers (gross)

606,998 109,254 27,607 56,820 804,902 1,605,581

Investment securities (Amortizedcost and Fair value through OCI) - - 31,715 8,577 52,540 92,832

1,243,185 306,691 142,523 330,767 896,992 2,920,158

LiabilitiesCustomer deposits 950,986 62,263 1,068 296 846,559 1,861,172Derivative liabilities 1,242 260 4,300 271 - 6,073On-lending facilities - - - - 68,344 68,344Borrowings - 67,255 3,302 9,245 118,264 198,066Debt securities - - - - 92,932 92,932

952,228 129,778 8,670 9,812 1,126,099 2,226,587

Total interest repricing gap 290,957 176,913 133,853 320,955 (229,107) 693,571


ZENITH BANK PLC




Ratesensitive

Non ratesensitive

AssetsCash and balances with central banks 16 587,793 239,167 348,626Treasury and other eligible bills (Amortized cost) 565,668 565,668 -Assets pledged as colaterals 20 6,930 6,930 -Due from other banks 19 249,524 249,524 -Loans and advances to customers (gross) 21 1,148,378 1,148,378 -Investment securities (Amortized cost and Fair value through OCI) 22 212,523 212,523 -

2,770,816 2,422,190 348,626

LiabilitiesCustomer deposits 30 2,079,862 939,012 1,140,850Current income tax 13 5,266 - 5,266On-lending facilities 32 59,528 59,528 -Borrowings 33 60,150 60,150 -

2,204,806 1,058,690 1,146,116

Total interest repricing gap 566,010 1,363,500 (797,490)

At 31 December 2013 Up to 1month


Over 1 year Total ratesensitive

AssetsCash and balances with centralbanks 100,600 - - 138,567 - 239,167Treasury and other eligible bills(Amortized cost) 119,240 233,546 206,136 6,746 - 565,668Due from other banks 249,524 - - - - 249,524Loans and advances tocustomers ( gross) 491,899 54,133 41,196 50,647 510,503 1,148,378Investment securities (Amortizedcost and Fair value through OCI) - 39,384 151 64,098 108,890 212,523Assets pledged as collateral - - 6,930 - - 6,930

961,263 327,063 254,413 260,058 619,393 2,422,190

LiabilitiesCustomer deposits 888,281 50,430 101 200 - 939,012On-lending facilities 309 48,511 900 - 9,808 59,528Borrowings 1,000 6,148 1,100 1,560 50,342 60,150

889,590 105,089 2,101 1,760 60,150 1,058,690

Total interest repricing gap 71,673 221,974 252,312 258,298 559,243 1,363,500

The management of interest risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Group’sfinancial assets and liabilities to various scenarios. Interest rate movement affects reported income by causing an increaseor decrease in net interest income and fair value changes.

The table below shows the impact on the Bank’s profit before tax if interest rates on financial instruments held at amortizedcost or at fair value had increased or decreased by 100 basis points, with all other variables held constant.

2014 2013

Effect of 100 basis points movement on profit before tax (In millions of Naira) 7,985 6,960

The effect of 100 basis points movement on profit is considered moderate and we do not expect all the rates to move at thesame time and in the same direction. This risk can largely be handled by the flexibility in the changing/adjustment rates onloans and deposits.


ZENITH BANK PLC


3.3.5 Equity and commodity price risk

The Group is exposed to equity price risk by holding investments quoted on the Nigerian Stock Exchange (NSE) and othernon-quoted investments. Equity securities quoted on the NSE are exposed to movement based on the general movementof the all share index and movement in prices of specific securities held by the Group.

Unquoted equity security held by the Group is mainly 5% equity holding in African Finance Corporation (AFC) valued at N11.6 billion (cost N6.4 billion) as at 31 December 2014. The AFC is a private sector-led investment bank and developmentfinance institution which has the Central Bank of Nigeria (CBN) as the single major shareholder (42.5%) with other Africanfinancial institutions and investors holding the remaining shares. The AFC operates a US Dollar denominated statement offinancial position and provides financing in this currency. Other equity investments carried at fair value through OCI are,Zenith Insurance Liimited, Zenith Capital Limited and Zenith Securities Limited, which together have a fair value of N1.5billion (cost N 846 million) as at 31 December 2014.

The Group does not deal in commodities and is therefore not exposed to any commodity price risk.

3.3.6 Fair value of financial assets and liabilities

IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques areobservable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservableinputs reflect the Group's market assumptions. These two types of inputs have created the following fair value hierarchy.

1 Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

2 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly (i.e. as prices) or indirectly (i.e. derived from prices).

3 Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

This hierarchy requires the use of observable market data when available. The Group considers relevant and observablemarket prices in its valuations where possible.

Financial instruments measured at amortised cost

Group

Note At 31 December 2014 At 31 December 2013 In millions of Naira Carrying

valueFair value Fair value

levelCarrying


levelAssetsCash and balances withcentral banks

16 752,580 752,580 2 603,851 603,851 2

Treasury bills (Amortizedcost)

295,397 282,536 2 579,511 580,929 2

Assets pledged as collateral 18 151,746 152,100 2 6,930 - 2Due from other banks 19 506,568 520,021 256,729 254,316 2Loans and advances tocustomers (gross)

21 1,758,335 1,305,066 3 1,276,122 1,264,127 3

Investment securities 22 200,079 193,846 2 290,191 279,926 2

LiabilitiesCustomer's deposits 30 2,537,311 2,534,441 2 2,276,755 2,276,755 2Borrowings 33 198,066 188,829 2 60,150 60,002 2On-lending facilities 32 68,344 63,985 2 59,528 59,382 2Debt securities issued 34 92,932 87,005 2 - -


ZENITH BANK PLC


Bank

At 31 December 2014 At 31 December 2013 In millions of Naira Note Carrying


levelCarrying


levelAssetsCash and balances withcentral banks

16 728,291 728,291 2 587,793 587,793 2

Treasury bills (Amortizedcost)

253,414 242,516 2 565,668 557,331 2

Assets pledged as collateral 18 151,746 152,100 2 6,930 6,930 2Due from other banks 19 470,139 467,971 249,524 247,179 2Loans and advances tocustomers (gross)

21 1,605,581 1,308,623 3 1,148,378 1,137,583 3

Investment securities 22 92,832 92,832 2 212,523 194,160 2

LiabilitiesCustomer's deposits 30 2,265,262 2,262,566 2 2,079,862 2,079,862 2Borrowings 33 198,066 189,071 2 60,150 60,002 2On-lending facilities 32 68,344 63,985 2 59,528 37,965 2Debt securities issued 34 92,932 87,005 2 - -

Where available, the fair value of loans and advances is based on observable market transactions. Where observablemarket transactions are not available, fair value is estimated using valuation models, such as discounted cash flowtechniques. Input into the valuation techniques includes expected lifetime credit losses, interest rates, prepayment ratesand primary origination or secondary market spreads. For collateral – dependent impaired loans, the fair value is measuredbased on the value of the underlying collateral.

The fair value of deposits from banks and customers is estimated using discounted cash flow techniques, applying the ratesthat are offered for deposits of similar maturities and terms. The fair value of deposits payable on demand is the amountpayable at the reporting date.

No fair value disclosures are provided for equity investment securities of N152 million (2013: N 90 million) that aremeasured at cost because their fair value cannot be measured reliably.


ZENITH BANK PLC


Financial instruments measured at fair value

At 31 December 2014In millions of Naira Level 1 Level 2 Level 3Financial assetsDerivative assets held for risk management - 17,408 -Treasury bills (FVTPL) 1,162 - -Investment securities (unquoted) - - 13,535

Reconciliation of Level 3 itemsAt 31 December 2013 10,654Gains/(losses) recognised through profit or loss 332Gains/(losses) recognised through other comprehensive income 2,549

At 31 December 2014 13,535

At 31 December 2013In millions of Naira Level 1 Level 2 Level 3Financial assetsDerivative assets held for risk management - 2,681 -Bonds (FVTPL) 2,280 - -Investment securities (unquoted) - - 10,654

2,280 2,681 10,654

Reconciliation of Level 3 items OtherAt 31 December 2012 9,405Gains/(losses) recognised through other comprehensive income 549Purchases 700Sales -Issues -Settlements -

At 31 December 2013 10,654

Level 3 fair value measurements

ii. Unobservable inputs used in measuring fair value

The table below sets out information about significant unobservable inputs used at 31 December 2014 and 2013 inmeasuring financial instruments categorized as level 3 in the fair value hierarchy

Type of financialinstrument

Fair values at 31December 2014

Valuationtechnique

Significantunobservable input

Range of estimates(average) forunobservableinputs

Fair valuemeasurementsensitivity tounobservableinputs

Unquoted equityinvestment

N11.69 billionA significantincrease in therisk premiumabove the risk ratewould result in alower fair value.

A significantincrease in theCAGR of cashflow would resultin a higher fairvalue

A significant increasein the risk premiumabove the risk ratewould result in a lowerfair value.

A significant increasein the CAGR of cashflow would result in ahigher fair value

Risk premium of9.23-11.29%(10.26%) above risk-free interest rate(2.17%) (2013:6.08-11% (7.44%) aboverisk free rate (3.02%))

5-year CompoundAnnual Growth Rate(CAGR) of cash flowof 17-19% (18%)(2013: 25-26 (24%))

A significant increasein the risk premiumabove the risk ratewould result in alower fair value.

A significant increasein the CAGR of cashflow would result in ahigher fair value

Risk premium is determined by adding country risk premium to the product of market premium and equity beta.


ZENITH BANK PLC


iii. The effect of unobservable inputs on fair value measuring

Although the Group believes that its estimates of fair value are appropriate, the use of different methodologies orassumptions could lead to different measurements of fair value. For fair value measurement in Level 3, changing one ormore of the assumptions would have the following effects.

Effect on OCI

At 31 December

At 31 December 2014 At 31 December 2013In millions of Naira Favourable

changesUn-

favourablechanges

Favourablechanges

Un-favourablechanges

Unquoted investment securities 12 (4) 1 (0.9)

The favourable and unfavourable effects of using reasonably possible alternative assumptions for valuation of unquotedequity securities have been calculated by recalibrating the model values using unobservable inputs based on upper andlower quartile respectively of the Group’s range of possible estimates. Key inputs and assumptions used in the model at 31December 2014 included a risk premium 10.26% above the risk-free interest rate of 2.17% (with reasonably possiblealternative assumptions of 9.23% and 11.29%) (2013: 6.76, 6.08 and 7.44 % respectively above risk free rate of 3.02%),and a 5-year CAGR of 18% (with reasonable possible alternative assumptions of 17 and 19%) (2013: 25, 24, 26 %respectively).

The fair values of quoted equity securities are determined by reference to quoted prices (unadjusted) in active markets foridentical instruments. For unquoted equity securities, where observable market transactions are not available, fair value isestimated using valuation models, such as discounted cash flow techniques. The fair value of our unquoted equity holdingin African Finance Corporation (AFC) is determined using equity discounted cash flow model. Inputs into the model includeestimated future cash flows to equity, valuation horizon and Capital Asset Pricing Model (CAPM) discount rate (Risk freerate plus risk premium).

(c) Fair valuation methods and assumptions

(i) Cash and balances with central banks

Cash and balances with Central banks represent cash held (including mandatory cash reserve requirements of 2014: N508billion, 2013: N 348 billion) with Central banks of the various jurisdictions in which the Group operates. The fair value ofthese balances is their carrying amounts.

(ii) Due from other banks

Due from other banks represents balances with local and correspondence banks, inter-bank placements and items in thecourse of collection. The fair value of the current account balances, floating placements and overnight deposits are theircarrying amounts.

(iii) Treasury bills and investment securities

Treasury bills represent short term instruments issued by the Central banks of the jurisdiction where the Group hasoperations. The fair value of treasury bills and bonds at fair value through profit or loss are determined with reference toquoted prices (unadjusted) in active markets for identical assets. The estimated fair value of treasury bills and bonds atamortized cost represents the discounted amount of estimated future cash flows expected to be received. Expected cashflows are discounted at current market rates to determine fair value.

The fair values of quoted equity securities are determined by reference to quoted prices (unadjusted) in active markets foridentical instruments. The fair value of the unquoted equity holding in AFC is determined on the basis of the discountedcashflow methodology which takes into account the discounted stream of future income and free cashflows of theinvestement. Subsequently,the percantage holding of the Bank is then applied on the derived company value.

(iv) Loans and advances to customers

Loans and advances are carried at amortized cost net of provision for impairment. The estimated fair value of loans andadvances represents the discounted amount of estimated future cash flows expected to be received. Expected cash flowsare discounted at current market rates to determine fair value.


ZENITH BANK PLC


(v) Other assets

Other assets represent monetary assets which usually has a short recycle period and as such the fair values of thesebalances approximate their carrying amount.

(vi) Customer deposits and borrowings

The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amountrepayable on demand. The estimated fair values of fixed interest-bearing deposits and borrowings are determined using adiscounted cash flow model based on a current yield curve appropriate for the remaining term to maturity.

3.4 Liquidity risk

Liquidity risk is the potential loss arising from the Group’s inability to meet its obligations as they fall due or to fundincreases in assets without incurring unacceptable cost or losses. Liquidity risk is not viewed in isolation, because financialrisks are not mutually exclusive and liquidity risk is often triggered by consequences of other bank risks such as credit,market and operational risks.

3.4.1 Liquidity risk management process

The Group has a sound and robust liquidity risk management framework that ensures that sufficient liquidity, including acushion of unencumbered and high quality liquid assets are maintained at all times, to enable the Group withstand a rangeof stress events, including those that might involve loss or impairment of funding sources.

The Group’s liquidity risk exposure is monitored and managed by the Asset and Liability Management Committee (ALCO)on a regular basis. This process includes:

(a) Projecting cash flows and considering the level of liquid assets necessary in relation thereto;

(b) Monitoring balance sheet liquidity ratios against internal and regulatory requirements;

(c) Maintaining a diverse range of funding sources with adequate back-up facilities;

(d) Managing the concentration and profile of debt maturities;

(e) Monitoring depositor concentration in order to avoid undue reliance on large individual depositors and ensure asatisfactory overall funding mix;

(f) Maintaining up to date liquidity and funding contingency plans. These plans identify early indicators of stressconditions and describe actions to be taken in the event of difficulties arising from systemic or other crises whileminimizing any adverse long-term implications for the business.

(g) Regular conduct of stress testing, coupled with testing of contingency funding plans from time to time.

The Maximum Cumulative Outflow has remained positive all through the short tenor maturity buckets. Assessments arecarried out on Contractual basis. These reveal very sound and robust liquidity position of the Group.

The Group maintains adequate liquid assets and marketable securities sufficient to manage any liquidity stress situation.The liquidity ratio remains one of the best among the peer banks and is far above the regulatory limits.

3.4.2 Funding approach

Our sources of liquidity are regularly reviewed by both the ALCO and the Treasury Group in order to avoid undue relianceon large individual depositors and ensure that a satisfactory overall funding mix is maintained at all times. The fundingstrategy is geared toward ensuring effective diversification in the sources and tenor of funding. The Group however placesgreater emphasis on demand deposits as against purchased funds in order to minimize the cost of funding.

As part of the management of liquidity risk arising from financial liabilities, the Group holds liquid assets comprising cashand cash equivalents, and debt securities issued by sovereigns, which can be readily sold to meet liquidity requirements. Inaddition, the Group maintains agreed lines of credit with other banks.


ZENITH BANK PLC


(i) Exposure to liquidity risk

The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers.For this purpose, ‘net liquid assets’ includes cash and cash equivalents and investment-grade debt securities for whichthere is an active and liquid market less any balances with foreign banks and regulatory restricted cash. Customers' depositexcludes deposit denominated in foreign currencies. Details of the reported Group ratio of net liquid assets to deposits fromcustomers at the reporting date and during the reporting period were as follows.

Group Group Bank Bank

2014 2013 2014 2013

At December 46.80% 59.26% 48.11% 55.34%

Average for the year 46.95% 56.41% 42.77% 54.24%

Maximum for the year 57.55% 61.96% 49.89% 59.49%

Minimum for the year 37.30% 46.90% 35.99% 47.20%

(ii) Liquidity reserve

The table sets out the component of teh Group's liquidity reserve.

Group 2014 2014 2013 2013

In millions of naira Carringvalue

Fair value Carryingvalue

Fair value

Cash and balances with CBN 244,434 244,434 255,158 255,158

Treasury Bills 295,397 295,397 579,511 579,511

Balances with other banks 232,188 232,188 146,938 146,938

Debt securities 148,673 148,673 197,781 197,781

Total 920,692 920,692 1,179,388 1,179,388

Bank 2014 2014 2013 2013

In millions of naira Carringvalue

Fair value Carryingvalue

Fair value

Cash and balances with CBN 220,216 220,216 239,167 239,167

Treasury Bills 339,015 339,015 565,668 565,668

Balances with other banks 147,923 147,923 97,257 97,257

Debt securities 123,672 123,672 107,180 107,180

Total 830,826 830,826 1,009,272 1,009,272


ZENITH BANK PLC


(iii) Financial assets available to support fundingThe table below sets out the availabilty of the Group's financial assets to support future funding

'In millions of NairaGroup

At 31 December 2014 At 31 December 2013Note Encumbered Unencumbered Total Encumbered Unencumbered Total


16508,146 244,434 752,580 348,693 255,158 603,851

Treasury bills - 295,397 295,397 - 579,511 579,511Assets pledged as collateral 151,746 - 151,746 6,930 - 6,930Due from other banks - 506,568 506,568 - 256,729 256,729Loans and advances - 1,729,507 1,729,507 - 1,251,355 1,251,355Investment securities - 200,079 200,079 - 303,125 303,125

'In millions of NairaBank

At 31 December 2014 At 31 December 2013Note Encumbered Unencumbered Total Encumbered Unencumbered Total

N.'million N.'milliom N.'milliom N.'milliom N.'milliom N.'milliomCash and balances with centralbanks

16508,075 220,216 728,291 348,626 239,167 587,793

Treasury bills - 253,414 253,414 - 6,930 6,930Assets pledged as collateral 151,746 - 151,746 6,930 - 6,930Due from other banks - 470,139 470,139 - 249,524 249,524Loans and advances - 1,580,250 1,580,250 - 1,126,559 1,126,559Investment securities - 33,003 33,003 - 24,375 24,375

(iv) Financial assets pledged as collateral

The total financial assets recognised in the statement of financial position that has been pledged as collateral for liabilitiesas at 31 December 2014 and 2013 as shown above. Financial assets are pledged as collateral as part of sales andrepurchases, borrowing transaction and collection agency transactions under terms that are usual for such activities.

The Group does not hold any financial assets accepted as collateral that the Group is permitted to sell or repledge in theabsence of default.

3.4.3 Liquidity gap analysis

The table below presents the cash flows of the Group's financial assets and liabilities and other liabilities by their remainingcontractual maturities at the statement of financial position date. The amounts disclosed in the table are the contractualundiscounted cash flows, whereas the Group manages the inherent liquidity risk based on expected undiscounted cashflows.

The Group's loan disbursement and availment process is centralized and controlled by Credit Risk Management Group(CRMG) of each banking subsidiary. All loan commitments advised to customers in offer letters are contingent on thesatisfaction of conditions precedent to draw down and availability of funds. Additionally, the Group retains control ofdrawings on approved loan facilities, through a referral method, where any such drawings must be sanctioned before it isprocessed. This ensures that the Group's commitments on any loan is to the extent of the drawn amount at any point intime.


ZENITH BANK PLC


(a) Group

At 31 December 2014In millions of Naira

Note Up to 1month


Over 1 year CarryingAmount


16 229,325 - - 523,255 - 752,580

Treasury bills 68,010 141,089 54,823 31,475 - 295,397Assets pledged as collateral 18 19,756 56,699 21,377 50 53,864 151,746Due from other banks 19 491,746 6,962 2,100 5,074 686 506,568Derivative assets 20 1,523 2 12,986 2,897 - 17,408Loans and advances tocustomers (gross)

21 628,811 111,589 30,161 63,963 923,811 1,758,335

Investment securities 22 - 33,527 31,715 13,763 121,074 200,079

Total assets 1,439,171 349,868 153,162 640,477 1,099,435 3,682,113

LiabilitiesCustomer's Deposit 30 2,469,564 66,301 1,140 306 - 2,537,311Derivatives liabilities 36 1,242 260 4,300 271 - 6,073On-lending facilities 32 - - - - 68,344 68,344Borrowings 33 - 67,255 3,302 1,560 125,949 198,066Debt securities issued 34 - - - - 92,932 92,932Financial guarantees 42 40,335 118,892 66,143 118,763 283,325 627,458

2,511,141 252,708 74,885 120,900 570,550 3,530,184

Net liquidity gap (1,071,970) 97,160 78,277 519,577 528,885 151,929

Cumulative gap (1,071,970) (974,810) (896,533) (376,956) 151,929 -


Note Up to 1month




16 279,040 - - 324,811 - 603,851

Treasury bills 120,740 234,094 216,731 7,946 - 579,511Assets pledged as collateral 18 - - 6,930 - - 6,930Due from other banks 19 256,729 - - - - 256,729Derivative assets 20 2,681 - - - - 2,681Loans and advances tocustomers (gross)

21 496,418 69,133 52,286 74,612 583,673 1,276,122

Investment securities 22 - 39,384 151 70,755 192,835 303,125Assets classified as held for sale27 - - 30,454 - - 30,454

Total assets 1,155,608 342,611 306,552 478,124 776,508 3,059,403

LiabilitiesCustomer's deposits 30 2,165,143 94,192 5,282 12,138 - 2,276,755Liabilities classified as held forsale

35 - - 14,111 - - 14,111

On-lending facilities 32 1,309 31,804 2,000 1,560 22,855 59,528Borrowings 33 - - - - 60,150 60,150Financial guarantees 42 25,862 87,216 63,615 172,973 299,181 648,847

2,192,314 213,212 85,008 186,671 382,186 3,059,391

Net liquidity gap (1,036,706) 129,399 221,544 291,453 394,322 12

Cumulative gap (1,036,706) (907,307) (685,763) (394,310) 12 -


ZENITH BANK PLC


(a) Bank


Note Up to 1month




16220,216 - - 508,075 - 728,291

Treasury bills 60,726 118,775 47,250 26,663 - 253,414Assets pledged as collateral 18 19,756 56,699 21,377 50 53,864 151,746Due from other banks 19 455,318 6,962 2,100 5,074 685 470,139Derivative assets 20

1,523 2 12,474 2,897 - 16,896Loans and advances tocustomers (gross)

21 606,998 109,254 27,608 56,820 804,901 1,605,581

Investment securities 22 - - 46,715 8,578 37,539 92,832

Total assets 1,364,537 291,692 157,524 608,157 896,989 3,318,899

LiabilitiesCustomer's deposits 30 2,201,626 62,264 1,068 304 - 2,265,262Derivative liabilities 36 1,242 260 4,300 271 - 6,073On-lending facilities 32 - - - - 68,344 68,344Borrowings 33 - 67,255 3,302 1,560 125,949 198,066Debt securities issued 34 - - - - 92,932 92,932Financial guarantees 42 38,796 114,356 63,619 114,232 272,517 603,520

2,241,664 244,135 72,289 116,367 559,742 3,234,197

Net liquidity gap (877,127) 47,557 85,235 491,790 337,247 84,702

Cumulative gap (877,127) (829,570) (744,335) (252,545) 84,702 -


Note Up to 1month




16263,693 - - 324,100 - 587,793

Treasury bills 119,240 233,546 206,136 6,746 - 565,668Assets pledged as collaterals 18 - - 6,930 - - 6,930Due from other banks 19 249,524 - - - - 249,524Loans and advances tocustomers (gross)

21491,899 54,133 41,196 50,647 510,503 1,148,378

Assets classified as held for sale - - - 4,749 - 4,749

Total assets 1,124,356 287,679 254,262 386,242 510,503 2,563,042

LiabilitiesCustomer's deposits 30 1,985,581 84,050 211 10,020 - 2,079,862Current income tax 13 - - - 5,266 - 5,266On-lending facilities 32 1,309 31,804 2,000 1,560 22,855 59,528Borrowings 33 - - - - 60,150 60,150Financial guarantees 25,197 84,974 61,979 168,527 291,490 632,167

2,012,087 200,828 64,190 185,373 374,495 2,836,973

Net liquidity gap (887,731) 86,851 190,072 200,869 136,008 (273,931)

Cumulative gap (887,731) (800,880) (610,808) (409,939) (273,931) -


ZENITH BANK PLC


3.5 Capital management

The strategy for assessing and managing the impact of our business plans on present and future regulatory capital formsan integral part of the Group’s strategic plan. Specifically, the Group considers how the present and future capitalrequirements will be managed and met against projected capital requirements. This is based on the Group's assessmentand against the supervisory/regulatory capital requirements taking account of the Group business strategy and valuecreation to all its stakeholders.

The Group prides itself in maintaining very healthy capital adequacy ratio in all its areas of operations. Capital levels aredetermined either based on internal assesments or regulatory requirements.

The Capital Adequacy of the Group is reviewed regularly to meet regulatory requirements and standard of international bestpractises in order to adopt and implement the decisions necessary to maintain the capital at a level that ensures therealisation of the business plan with a certain safety margin.

The Group undertakes a regular monitoring of capital adequacy and the application of regulatory capital by deployinginternal systems based on the guidelines provided by the Central Bank of Nigeria (CBN) and the regulatory authorities ofthe subsidiaries for supervisory purposes.

The group has consistently met and surpassed the minimum capital adequacy requirments applicable in all areas ofoperations.

Most of the Group's capital is Tier 1 (Core Capital) which consists of essentially share capital, and reserves created byappropriations of retained earnings.

Banking subsidiaries in the Group, not incorporated in Nigeria, are directly regulated and supervised by their local bankingsupervisor and are required to meet the capital requirement directive of the local regulatory jurisdiction. Parental supportand guidance are given at the Group level where the risk level in the Group in relation to capital level and adequacy isclosely monitored. We support and meet all capital requests from these regulatory jurisdictions and determine the adequacybased on our expansion strategies and internal capital assessments.

The Group’s capital plan is linked to its business expansion strategy which anticipates the need for growth and expansion inits branch network and IT infrastructure. The capital plan sufficiently meets regulatory requirements as well as providingadequate cover for the Group’s risk profile. The Group's capital adequacy remains strong and the capacity to generate andretain reserves continues to grow.

The Group will only seek additional capital where it finds compellling business need for it and with the expectation that thereturns would adequately match the efforts and risks undertaken.

The following sources of funds are available to the group to meet its capital growth requirements:

1. Profit from Operations :The Group has consistently reported good profit which can easily be retained to support thecapital base.

2. Issue of Shares: The Group can successfully access the capital market to raise desired funds for its operations andneeds.

3. Bank Loans (Long Term/short Term).

Zenith Bank commenced capital computations in accordance with Basel II standard under the guidelines issued by theCentral Bank of Nigeria. The guidelines require capital adequacy computations based on the Standardized MeasurementApproach for Credit Risk and Market Risk while Basic Indicator Measurement Approach was advised for Operational Risk.The capital requirement for the Bank has been set at 15% as an International Bank in accordance with the guidelines.


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The table below shows the computation of the Group's capital adequacy ratio for the year ended 31 December 2014 aswell as the 2013 comparatives. During those two years, the individual entities within the Group complied with all of theexternally imposed capital requirements to which they are subject.

Group Bank

In millions of Naira 2014 2013 2014 2013Tier 1 capital Basel II Basel I Basel II Basel IShare capital 15,698 15,698 15,698 15,698Share premium 255,047 255,047 255,047 255,047Statutory reserves 78,267 57,762 71,582 57,710General reserves - 1,371 - -SMEIES reserve 3,729 3,729 3,729 3,729Retained earnings 183,396 161,144 150,342 126,678Credit risk reserve - 10,697 - 10,243Non- controlling interest - 4,015 - -

Total qualifying Tier 1 capital 536,137 509,463 496,398 469,105

Deferred tax assets (6,449) (749) (6,333) -Intangible assets - (1,935) - (1,703)Investment in uncosolidated banking and financialsubsidiaries

- - (26,937) -

Adjusted Total qualifying Tier 1 capital 529,688 506,779 463,128 467,402

Tier 2 capitalRevaluation reserve - investment - 3,499 - 3,517Translation reserve - (5,683) - -Other comprehensive income (OCI) 4,229 - 6,066 -

Total qualifying Tier 2 capital 4,229 (2,184) 6,066 3,517

Investment in uncosolidated banking and financialsubsidiaries - - (6,066) -

Net Tier 2 capital 4,229 (2,184) - 3,517

Total regulatory capital 533,917 504,595 463,128 470,919

Risk-weighted assetsCredit risk 2,187,827 1,950,004 1,970,896 1,796,099Market risk 7,685 - 2 -Operational risk 484,443 - 462,264 -

Total risk-weighted assets 2,679,955 1,950,004 2,433,162 1,796,099

Risk-weighted Capital Adequacy Ratio (CAR) %20 %26 %19 %26


ZENITH BANK PLC


3.6 Operational risk

Operational Risk is the risk of loss resulting from inadequate and /or failed internal processes, people and systems or fromexternal events, including legal risk and any other risks that is deemed fit on an ongoing basis but exclude reputation &strategic risk. Operational risk exists in all products and business activities.

The Group has a broad Operational Risk management framework which defines the set of activities designed to proactivelyidentify, assess and manage all operational risk by aligning the people, technology and processes with best riskmanagement practices towards enhancing stake holder's value and sustaining industry leadership.

Operational risk objectives includes the following: To provide clear and consistent direction in all operations of the group To provide a standardised framework and appropriate guidelines for creating and managing all operational risk

exposures To enable the group identify and analyse events (both internal and external) that impact on its business.

The Operational Risk unit constantly carry-out reviews to identify and assess the operational risk inherent in all materialproducts, activities, processes and sytems. It also ensures that all business unit within the Bank monitor their operationalrisk using set standards and indicators. Siginificant issues and exceptions are reported to Risk Management and are alsopicked up by the independent risk function for discussion at the risk management committee.

Disaster recovery procedures, business continuity planning, self compliance assurance and internal audit also form anintegral part of our operational riskmanagement process.

There was no significant financial loss resulting from operational risk incidence during the financial year across the group.However, the terorrist activities in the North-East part of Nigeria and the Ebola virus disease (EVD) outbreak in SierraLeone impacted on business operation in those locations to a certain extent.

3.7 Strategic risk

Strategic risk is possible source of loss that might arise from the pursuit of an unsuccessful business plan.Strategic risk examines the impact of design and implementation of business models and decisions, on earnings andcapital as well as the responsiveness to industry changes. This responsibility is taken quite seriously by the Board andExecutive Management of the Group and deliberate steps are taken to ensure that the right models are employed andappropriately communicated to all decision makers in the Group. The execution, processes and constant reviews ensuresthat strategic objectives are achieved. This has essentially driven the Group’s sound banking culture and performancerecord to date.

3.8 Legal risk

Legal risk is defined as the risk of loss due to defective contractual arrangements, legal liability (both criminal and civil)incurred during operations by the inability of the organisation to enforce its rights, or by failure to address identifiedconcerns to the appropriate authorities where changes in the law are proposed.

The Group manages this risk by monitoring new legislation, creation of awareness of legislation amongst employees,identification of significant legal risks as well as assessing the potential impact of these.

Legal risks management in the Group is also being enhanced by appriopriate product risk review and management ofcontractual obligations via well documented Service Level Agreements and other contractual documents.

3.9 Reputational risk

It is recognised that the Group’s reputation may suffer adversely due to bad publicity, non-compliance with regulatory rulesand legislation, which may lead to a significant drop in new business and/or a significant increase in the number of lapsesand/or withdrawals.

The Group promotes sound business ethics among its employees.

The Group also strives to maintain quality customer services and procedures, and business operations that enablecompliance with regulatory rules and legislation in order to minimise the risk of a drop in the reputation of the Group.

The Group did not record any issue with major reputational effect in the financial year.


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3.10 Taxation risk

Taxation risk refers to the risk that new taxation laws will adversely affect the Group and/or the loss of non-compliance withtax laws.

The taxation risk is managed by monitoring applicable tax laws, maintaining operational policies that enable the Group tocomply with taxation laws and, where required, seeking the advice of tax specialists.

This risk is well managed across the group.

3.11 Regulatory risk

The Group manages the regulatory risk it is potentially exposed to by monitoring new regulatory rules and applicable laws,and the identification of significant regulatory risks. The Group strives to maintain appropriate procedures, processes andpolicies that enable it to comply with applicable regulation.

The Group has continued to maintain zero tolerance posture for any regulatory breaches in all its area of operations.

3.12 Sustainability Report

Our sustainability journey started with the establishment of the Zenith Philanthropy unit, which was charged with theresponsibility of seeking out worthy projects that positively impacts the lives of people and the communities at large.Learning from our long experience in philanthropic community development and support, the Group realized the opportunityto achieve greater impacts by delivering on its community commitment through a more strategic approach and establisheda Corporate Social Responsibility (CSR) vision and mission.

Later as global awareness on sustainable development became prevalent, the Bank was quick to realize the benefits ofsustainability to its core business. Today, we continue to expand on our community initiatives, but are striving to integratesustainability into everything we do. Under our newly developed sustainability strategy and framework we are working toentrench the Nigerian Sustainability Banking Principles (NSBP) into the DNA of our business. Based on the Nine Principlesof the NSBP, we have achieved the following:

3.12.1 Principle 1: Managing environmental and social risks in our business decisions

Our lending policies have been redesigned to ensure that facilities are not extended to industries that engage in illegalactivities, pollute the environment, have no proper pollution control methods, are involved in manufacturing and sellingarms, as well as those engaged in activities that involve harmful or exploitative forms of forced labour or child labour.

We also have in place an Environmental and Social Management System (ESMS) where the Bank does a social andenvironmental risk analysis for borrowers and takes measures to avoid, mitigate and minimise the risks identified. TheESMS of the Bank identifies Environmental & Social (E&S) risks in the projects/companies the bank finances andencourages mitigating action by these groups to minimize such risks at a very early stage of the credit evaluation.

3.12.2 Principle 2: Managing the bank’s own environmental and social footprints

As a financial institution, Zenith Bank’s direct environmental impacts occur through the occupation, operation andmaintenance of buildings, fleet, data centres and ATMs. This includes environmental impacts associated with energy use,water use and waste. The bank also bears a burden on outsourced technical activities carried out on its behalf. An exampleis in the provision of network links, construction activities and advertising.

All required regulations are complied with in outsourcing these services as the providers of solutions and suppliers ofequipment’s and tools are requested to obtain the necessary licenses and comply with relevant laws and regulations. Theinternal environmental management developed in Zenith Bank can be illustrated as follows:.

(i) Paper consumption

Paper is one of the most largely consumed natural resources in the bank. It is used both internally and to send informationto customers, in advertising, publications, etc. Though the use of paper is relevant; its reduction and rational use is ofparticular interesting to the bank as regards the environmental impact of our business.

Actions

Use of Board IQ- Electronic documentation for Board Meetings since 2013


ZENITH BANK PLC


A co-ordinated campaign to encourage employees to limit their printing.

Use of Intranet for different information flows (communications to employees, press releases, employees’

newssheet, etc.)

Multi-use envelopes for internal correspondence.

Use of recycled paper.

Scanner in branches / offices to digitalize documents.

Bank statements printed on both sides.

Correspondence to customers replaced with electronic documents / Sending single receipts to customers / Alerts

to cell phones, where possible.

Reduced paper consumption in statements of account entries in ATMs and use of e-statements.

Installation of paper and cardboard containers for subsequent collection by external companies for recycling.

(ii) Water consumption

Actions

Cisterns with optional reduced discharge

Posters encouraging rational use of water in WC

Reduced flow in push-button taps

Renewal of cooling equipment to save on consumption

(iii) Energy consumption

Zenith Bank has taken action to save energy. Apart from the environmental aspect, this also means economic savings.Different initiatives have thus been taken in this regard:

Substitution of low-consumption monitors.

Automatic shutdown of equipment where possible

Replacement of conventional lighting with lights with a greater lighting efficiency

(iv) Branch Expansion

The bank will continue to drive efficiency in its expanding property portfolio to internationally recognized green buildingcertification system, providing a framework for identifying, and implementing, practical and measurable green buildingdesign features. In addition, Zenith bank will:

Continue to build its flagship buildings to high standards of environmental efficiency

Promote the reduction in energy consumption in all branches

Continue to develop the use of renewable technology to reduce carbon emissions

Use of lower power generating sets at off-peak periods.

(v) Emissions Control

Travel control

Control of emissions in air-conditioning installations according to the Kyoto Protocol


ZENITH BANK PLC


Monitoring of generators for efficiency, reduction of emissions and discharges

Monitoring of noise and vibrations

vi) Waste Control

This section is important to Zenith, although the bank does not produce highly polluting waste, they do produce waste inlarge quantities. Consequently, the bank contracts specialized firms to collect and recycle that waste.

Selective waste collection

Contract with confidential paper destruction and waste management firms

Toner refills for reuse

Collection of hazardous waste (fluorescent lights, expired extinguishers, generators batteries)

Collection of bio-sanitary waste

Collection of electric/electronic waste for reuse

Collection of cell phones

Collection of used batteries

Collection of rubble at suitable places

Specifically, for electronic waste control, effort is made to encourage recycling of the disposed units at the Ojota dump siteinLagos where low scale recycling has commenced.

(vii) Actions regarding purchases and suppliers

They must be committed to aligning their operations with the acceptable standards in the areas of human rights,

labour, environment and anti-corruption.

They must comply with environmental and waste management laws

Environmentally responsible purchase criteria of material suppliers

(viii) Actions regarding training and awareness

Since Zenith Bank requires vast human resources, the bank has contacts with large numbers of individuals. Thus, Zenithhas a huge potential to influence people, promoting environment-friendly habits and conduct. In an effort to increase ouremployees’ environmental conscience and awareness, Zenith Bank has developed several training programmes andactions, including:

Key Environmental Risk Management unit in the bank and appointment of Environmental Coordinators for the

bank.

Specialized training (technicians, internal auditors, cleaning staff on waste management)

Environment awareness programmes for all employees. Memorandums encouraging energy saving and reduced

consumption

Environment awareness programmes for new employees

Employee environment manual in Intranet and environmental procedures. Code of conduct and best practices

among employees

Promotion of volunteer work among employees


ZENITH BANK PLC


ix) Occupational Health and Safety

The health and safety of employees, customers and other stakeholders is of paramount importance to the bank. The groupconstantly seeks to identify and reduce the potential for accidents or injuries in all its operations. There is on-going trainingof health and safety officers in line with the bank’s health and safety policy. There is also adequate communication of thehealth and safety policies across the bank to ensure staff are conversant with its content.

3.12.3 Principle 3: Safeguarding Human Rights in our Business Operations and Business Activities.

Zenith Group upholds human rights in our Business Operations and Business Activities, which reflects in our dealings withemployees, suppliers and third-party contractors. The Bank remains committed to the protection of human rights in theworkforce and will continue to provide a level playing field, giving equal platform for all to thrive.

We recognize the need to promote a diverse workforce as a means to attracting top-flight talent and enhancing ourcompetitive advantage. We further recognize that each employee brings to the workplace experiences and capabilities thatare as unique as the individual; hence the bank treats all employees fairly. All employees and applicants for employmentwill be treated and evaluated according to their job-related skills, qualifications, abilities and aptitudes. Decisions based onattributes unrelated to job performance (for example, race, colour, gender, religion, personal associations, national origin,age, disability, political beliefs, marital status, sexual orientation, and family responsibilities) constitute unlawfuldiscrimination and are prohibited

The recruitment of disabled people is a pivotal aspect of the bank’s diversity policy. The bank ensures that all availablepositions are open to disabled people and as a matter of recruitment priority; the bank encourages qualified disabledpersons to apply to join its workforce.

Zenith Bank has developed and disseminated a Code of Conduct policy which is a common reference point for defininghow each of us is expected to act when conducting Zenith Bank business. All employees must adhere to the principles andrequirements contained in the Code and take reasonable steps to ensure that other individuals or groups that conductbusiness on behalf of Zenith Bank, including contractors, agents, consultants and other business partners do likewise.Employees must also have a detailed understanding of Zenith Bank policies, procedures and other Bank requirements thatapply to their work.

Zenith Bank will only collect and retain personal information that is necessary to meet business requirements, and aspermitted by law in places where we operate.

3.12.4 Principle 4: Promoting women’s economic participation/empowerment through our Business Activities.

Zenith Group promotes women’s economic empowerment through a gender inclusive workplace culture in our BusinessOperations and seeks to provide products and services designed specifically for women through our Business Activities.

As testament to our belief in female empowerment, the bank consciously took steps to assure that women continue to haveaccess to opportunities within the organisation and are upwardly mobile within the system at all managerial levels within thebank - achievement of 44% female gender balance within management workforce.

Zenith Bank is also implementing female mentoring framework a program under which talented female staff who havedistinguished themselves over the years in the employment of Zenith Bank and have demonstrated immense leadershippotentials are assigned mentors at the top echelon of the Bank (General Manager to Executive Director level) with a view togroom them for top flight positions within the bank or its subsidiaries right up to board level.

In fulfilment of the Banker’s Committee Recommendation on Women Economic Empowerment, the bank shall organize aminimum of one female leadership training at least once annually with a view to maximize the career potential of femaleemployees with high leadership promise. In the coming year, Zenith Bank will create working plans that are flexible so as toassist working mothers contribute meaningfully to the bank whilst also meeting the demanding requirements of a mother.Flexi plans do not imply lower standards for working mothers, rather it provides for flexible working hours around the “core”working hours and employees are allowed to build their working hours around the “core” working hours but the total hoursworked is the same for all employees.

The bank will consider partnerships with relevant organizations such as the Women in Business (WIMBIZ) to targetpromising women entrepreneurs and design products that will effectively meet their needs. Zenith has also empoweredfemale participation in sports with our titled sponsorship of the Zenith National Female Basketball League. Several of thebeneficiaries of this initiative now ply their basketball trade in different teams and leagues in the United States and Europe.


ZENITH BANK PLC


3.12.5 Principle 5: Promoting financial inclusion of community and groups with limited access to the formalfinancial sector.

Zenith Group as a key stakeholder in the Nigerian financial services landscape supports efforts to promote financialinclusion and literacy and views same as a responsibility it owes the un-banked public. We have taken steps to reduce thepreponderance of adults without access to suitable financial products and explore opportunities to promote financialliteracy.

In Zenith Bank, the overall goal of our financial literacy strategy is to assist the attainment of financial independence andfinancial stability through the empowerment of citizens with knowledge of various types of financial products and servicesavailable;

We realize that some groups are disadvantaged with respect to access to financing. Available data has shown that women,persons with disabilities, vulnerable groups, people in rural areas and the un-banked, etc have limited or no access tocredit. Furthermore, an analysis of bank products shows that women and disadvantaged persons tend to be limited tosavings (basic) accounts only, thus limiting the velocity and range of transactions that these groups can carry out.

The Bank’s has developed some products to support this initiative:

Zenith Children's Account (ZECA)

Zenith Integrated Student Account (ZISA)

Aspire Account

EazySave Classic Accounts

EazySave Premium Accounts

EazyMoney – Mobile Phone enabled

Agent Banking

Zenith Mobile Banking

The Bank believes that strategic development and deployment of e-banking products and platforms will be a keycompetitive factor in the banking industry in Nigeria as these products are expected to enable the Bank to reach out toexisting and potential customers even in areas where the Bank may not have a physical presence.

The Bank also anticipates using its e- banking products to gain customers who did not previously use banking services, theso-called ‘un- banked’ population, by providing easy access to banking services through their mobile telephones. The banktherefore sees its deployment of e-banking services as a key driver to expanding the Bank’s Financial Inclusion Strategy.

The Bank is also planning to expand its network of ATM, POS, branches and business offices throughout Nigeria tomaintain its position amongst the top five banks in Nigeria.

3.12.6 Principle 6: Meeting the imperatives for good governance, transparency and accountability.

The bank has since established an E&S governance structure in support of its sustainable banking approach. Also, thebank's Environmental Risk Policy and process details clear roles, lines of responsibility, authority and accountability relatingto assessing, categorising and managing of environmental risk.

Nevertheless, to further strengthen our governance structure and bring it at par to best practices, we are currently workingtowards institutionalising the following:

1. The formation of a standalone Sustainability Department.

2. Formation of a Board-level Sustainable Banking Governance Committee to oversee the development ofSustainable Banking commitments.


ZENITH BANK PLC


3.12.7 Principle 7: Supporting capacity building.

Zenith has in the past conducted E&S introductory training for staff of key business units and back-office functions. Somestaffs of key departments have also enjoyed external E&S training even though locally. Most recently, we developed asustainability portal on the intranet for the specific purpose of creating awareness on E&S issues and making available allinformation relating to the banks E&S governance, policies and processes.

Nevertheless, the bank is working to further improve in our capacity building plan by exploring the following:

1. Developing a tailor-made Sustainable Banking training session specific for Board and senior management.

2. A bank-wide E&S e-learning programme across all levels and operational functions.

3.12.8 Principle 8: Promoting collaborative partnership to accelerate sector progress.

Zenith is a member of UNEP FI and continues to foster other partnership arrangements to accelerate the growth ofsustainability within the sector. The Bank played an active role in the development of ‘Nigeria Sustainable BankingPrinciples’ in collaboration with other financial institutions. The Bank is also a Member of the Steering Committee onSustanability.

Other initiatives taken up by the bank include:

Compliance with building codes and environmental criteria in the construction and management of properties used

as business facilities. This includes impact on traffic flow and the layout of the branches.

The construction and maintenance of roads and other facilities at host communities where we operate. For

example construction and maintenance of Ajose Adeogun street where our Head Office is located for over 7years.

Participate in other CSR activities – Youth Empowerment, provision of laptops to schools, Sports sponsorship,

construction of IT Centres, renovation of schools and City Social Centres, etc..

3.12.9 Principle 9: Reporting

As a signatory to the NSBP, Zenith remains fully committed to its reporting framework as mandated by the CBN. We havecomplied with the CBN’s request for one-off reports on the NSBP and will continue to report on the subsequent semi-annualreporting commencing from 2015. While we continue to enhance our E&S methodologies in other to strengthen our internalreporting capacity, we have for the past three (3) years reported exclusively on sustainability in our published annualfinancials.

Going forward, our strategy is to benchmark and align the extent of the banks sustainability reporting (internal and external)to other international and best practice standards like the Equator Principles and Global Reporting Initiative (GRI).

The Group believes that social and environmental issues will continue to grow in importance in the coming years and Zenithaims to develop a greater understanding of the risks associated with these issues, and the effect they will have on itsclients, through investigation and research and, where appropriate, through engagement with relevant industry andregulatory bodies.

4 Critical accounting estimate and judgements

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the nextfinancial year. Estimates and judgements are continually evaluated and are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1 Impairment losses on loans and advances


ZENITH BANK PLC


The Group reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether animpairment loss should be recognised, the Group makes judgements as to whether there is any observable data indicatingthat there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can beidentified with an individual loan in that portfolio. This evidence may include observable data indicating that there has beenan adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlatewith defaults on assets in the group. Management uses estimates based on historical loss experience for assets with creditrisk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cashflows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewedregularly to reduce any differences between loss estimates and actual loss experience.

The specific component of total allowance for impairment applies to credits evaluated individually for impairment and isbased upon management’s best estimate of the present value of the cash flows that are expected to be received. Inestimating these cash flows, management makes judgment about a customer’s financial situation and the net realizablevalue of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and estimates ofcash flows considered recoverable are independently reviewed and approved.

Collectively assessed impairment allowances cover credit losses inherent in portfolios with similar economic characteristicswhen there is objective evidence to suggest that they contain impaired claims, but the individual impaired items cannot beidentified. In assessing the need for collective loan assessment, management considers factors such as credit quality,portfolio size, concentrations, and economic factors. In estimating the required allowance, assumptions are made to definehow inherent losses are modelled and to determine the required input parameter, based on historical experience andcurrent economic conditions. The accuracy of allowance depends on how well future cash flows and the model assumptionsand parameters are estimated.

4.2 Determining fair values

The determination of fair value for financial assets and liabilities for which there is no observable market prices requires theuse valuation techniques as described in note 3.3.6(c). For financial instruments that trade infrequently and have little pricetransparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration,uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used inmaking the measurements.

i) Level 1 : Quoted market price(unadjusted) in an active market for an identical instrument..

ii) Level 2 : Valuation techniques based on observable inputs, either directly - i.e , as prices - or indirectly - i.e derived fromprices. This category includes instruments valued using : quoted market prices in active markets for similar instruments ;quoted prices for identical or similar instruments in markets that are considered less than active; or other valuationtechniques where all significant inputs are directly or indirectly observable from market data

iii) Level 3 : Valuation techniques using significant unobservable inputs. This category includes all instruments where thevaluation technique includes inputs not based on observable data and the unobservable inputs have a significant effect onthe instrument's valuation. This category includes instrument that are valued based on quoted prices for similar instrumentswhere significant unobservable adjustments or assumptions are requried to reflect differences between the instruments.

4.3 Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant estimates are required in determining thegroupwide provision for income taxes. There are many transactions and calculations for which the ultimate taxdetermination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax auditissues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is differentfrom the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in theperiod in which such determination is made.

4.4 Prudential Adjustments

Provisions under prudential guidelines are determined using the time based provisioning prescribed by the Revised CentralBank of Nigeria (CBN) Prudential Guidelines. This is at variance with the incurred loss model required by IFRS under IAS39. As a result of the differences in the methodology/provision, there will be variances in the impairments allowancesrequired under the two methodologies.


ZENITH BANK PLC


Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would berequired to make provisions for loans as prescribed in the relevant IFRS Standards when IFRS is adopted. However, Bankswould be required to comply with the following:

(a) Provisions for loans recognised in the profit and loss account should be determined based on the requirements of IFRS.However, the IFRS provision should be compared with provisions determined under prudential guidelines and the expectedimpact/changes in general reserves should be treated as follows:

Prudential Provisions is greater than IFRS provisions; the excess provision resulting should be transferred fromthe general reserve account to a "regulatory risk reserve".

Prudential Provisions is less than IFRS provisions; IFRS determined provision is charged to the statement ofcomprehensive income. The cumulative balance in the regulatory risk reserve is thereafter reversed to thegeneral reserve account

(b) The non-distributable reserve should be classified under Tier 1 as part of the core capital.

In the guidelines to IFRS implementation, the Central Bank of Nigeria (CBN) directed banks to maintain a regulatory creditrisk reserve in the event that the impairment on loans determine using the CBN prudential guideline is higher than theimpairment determine using IFRS principles. As a result of this directive, the Bank holds total credit risk reserves ofN10,243 million as at 31 December 2014.

Provision for loan losses per prudential guidelines

In millions of Naira2014 2013

Loans and advances 35,019 30,415Other financial assets 5,859 6,837

40,878 37,252Impairment assessment under IFRSLoans and advancesSpecific allowance for impairment 21b 7,480 5,600Collective allowance for impairment 21b 17,851 16,219

25,331 21,819Other financial assetsSpecific allowance for impairment on associated companies 24 1,222 1,222Specific allowance for impairment on other assets 26 4,637 4,637

31,190 27,678

Required credit reserve as at year end 9,688 9,574

Although the expected closing credit risk reserve balance (as per the reconciliation above) is N9.7 billion, the credit riskreserve was left unchanged at N10,243 million because the Bank's directors are of the opinon that it is more prudent tomaintain the credit risk reserve at the balance as at 31 December 2014.

5. Segment analysis

The Group's strategic divisions offer different products and services, and are managed seperately based on the Group'smanagement and internal reporting structure. For each of the strategic divisions, the Group's Executive Management (Chief Operating Decision Maker) reviews internal management reports on a monthly basis.

The Group's operations are primarily organised on the basis of its products and service offerings in Nigeria, while thebanking operations outside Nigeria are reported seperately for Africa and Europe. The following summary describes each ofthe Group's reportable segments:

(i) Corporate, Retail Banking and Pension Custodial services - Nigeria

This segment provides a broad range of banking and pension custodial services to a diverse group of corporations,financial institutions, investment funds, governments and individuals.

(ii) Treasury and Investment Management - Nigeria


ZENITH BANK PLC


Provision of investment advisory, financial planning services and investment product offerings (primarily through separatelymanaged accounts such as mutual funds and private investment funds) to a diverse group of institutions and individuals. Italso includes brokerage services, financing services and securities lending services to institutional clients, including mutualfunds, pension funds and to high-net-worth individuals.

(iii) Outside Nigeria Banking - Africa and Europe

These segments provide a broad range of banking services to a diverse group of corporations, financial institutions,investment funds, governments and individuals outside Nigeria. The reportable segments covers banking operations inother parts of Africa (Ghana, Sierra Leone and The Gambia) and Europe (the United Kingdom).

(iv) All other segments

These segments provide share registration and funds trusteeship services in Nigeria. None of these individual activities orservices constitutes a separate reportable segment.

Transactions between the business segments are on normal commercial terms and conditions.


ZENITH BANK PLC


Nigeria Outside Nigeria BankingCorporateretail andpension

custodianservices

(continuedoperations)

Africa(continuingoperations)

Europe(continuingoperations)

Totalreportablesegments

Eliminations Consolidated

In millions of Naira31 December 2014Revenue:Derived from external customers 370,111 24,717 7,690 402,518 - 402,518Derived from other business segments 7,623 1,913 2,932 12,468 (11,643) 825

Total revenue* 377,734 26,630 10,622 414,986 (11,643) 403,343

Share of profit of associates - - - - 138 138Interest expense (99,439) (7,640) (4,963) (112,042) 5,123 (106,919)Impairment charge for credit losses (12,392) (672) - (13,064) - (13,064)Operating and underwriting expenses (153,141) (8,064) (2,491) (163,696) (6) (163,702)

Profit before tax 112,762 10,254 3,168 126,184 (6,388) 119,796Tax expense (16,526) (3,047) (768) (20,341) - (20,341)

96,236 7,207 2,400 105,843 (6,388) 99,455


custodianservices






In millions of Naira31 December 2014Capital expenditure** 11,603 (94) 38 11,547 - 11,547

Identifiable assets 3,433,382 204,273 297,431 3,935,086 (179,822) 3,755,264

Identifiable liabilities 2,906,097 180,707 263,023 3,349,827 (147,201) 3,202,626

* Revenues are allocated based on the location of the operations. ** Capital expenditure consists of expenditure on intangible assets and property and equipment during the year.


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custodianservices


Alldiscontinuedoperations




Total othersegments

(Discontinuedoperations)



In millions of Naira31 December 2013Revenue:Derived from external customers 314,565 14,181 19,124 5,502 339,191 14,181 353,372 - 353,372Derived from other business segments 1,193 2,139 - 2,976 4,169 2,139 6,308 (8,210) (1,902)

Total revenue* 315,758 16,320 19,124 8,478 343,360 16,320 359,680 (8,210) 351,470

Share of profit of associates - - - - - - - 118 118Interest expense (68,471) - (4,838) (3,793) (77,102) - (77,102) 6,306 (70,796)Impairment charge for credit losses (9,907) (109) (1,160) - (11,067) (109) (11,176) - (11,176)Operating and underwriting expenses (139,074) (11,823) (6,426) (1,696) (147,196) (11,823) (159,019) - (159,019)

Profit before tax 98,306 4,388 6,700 2,989 107,995 4,388 112,383 (1,786) 110,597Tax expense (11,622) (658) (2,351) (648) (14,621) (658) (15,279) - (15,279)

86,684 3,730 4,349 2,341 93,374 3,730 97,104 (1,786) 95,318


custodianservices


Alldiscontinuedoperations




Total othersegments

(Discontinuedoperations)



In millions of Naira31 December 2013Capital expenditure** 11,254 657 835 105 12,194 657 12,851 - 12,851

Identifiable assets 2,890,293 30,454 146,692 225,074 3,262,059 30,454 3,292,513 (149,380) 3,143,133

Identifiable liabilities 2,406,847 14,111 127,782 205,399 2,740,028 14,111 2,754,139 (120,257) 2,633,882

* Revenues are allocated based on the location of the operations. ** Capital expenditure consists of expenditure on intangible assets and property and equipment during the year.


ZENITH BANK PLC


Group Bank

In millions of Naira 2014 2013 2014 2013

6. Interest and similar income

Inter-bank placements 10,026 11,702 13,266 14,515Treasury bills 56,463 77,728 47,781 76,307Government and other bonds 31,997 35,947 23,583 26,322Derivative held for risk management 1,972 - - -Loans and advances to customers 212,964 145,161 200,541 137,187

313,422 270,538 285,171 254,331

Total interest income, calculated using the effective interest rate method reported above that relates to financial assets notcarried at fair value through profit or loss are N 310,301 million (2013: N 269,760) and N 283,704 (2013: N 253,553) forGroup and Bank respectively.

Included in interest income on loans and advances are amounts totalling N2,752 million (2013: N3,160 million) and N2,315million (2013: N2,022 million) for the Group and Bank respectively which represent interest incomes on impaired financialassets, recognised using the rate of interest used to discount the future cash flows for the purpose of measuring theimpairment loss.

7. Interest and similar expense

Current accounts 4,020 4,223 3,940 4,159Savings accounts 6,183 3,825 6,128 3,772Time deposits 85,156 58,812 80,844 59,082Inter-bank takings 3,033 2,478 - -Borrowed funds 8,527 1,458 8,527 1,458

106,919 70,796 99,439 68,471

Total interest expense, calculated using the effective interest rate method reported above does not include interest incomeon financial liabilities carried at fair value through profit or loss.

8. Impairment charge for credit losses

Overdraft (see note 21) 10,929 8,059 10,257 6,899Term loans (see note 21) 2,145 2,774 2,145 2,774On lending (see note 21) - 179 - 179Advances under finance lease (see note 21) (10) 55 (10) 55

13,064 11,067 12,392 9,907

9. Fee and commission income

Credit related fees 16,251 11,206 13,664 9,033Commission on turnover 27,165 27,033 26,168 26,076Income from financial guarantee contracts issued 2,776 2,525 2,559 2,304Fees on electronic products 2,686 2,509 2,391 2,411Foreign currency transaction fees and commissions 1,718 1,329 1,231 1,167Asset based fees 4,345 3,253 - -Auction fees income 3,065 - 3,065 -Corporate finance fees 6,001 5,682 5,797 5,519Foreign withdrawal charges 4,903 - 4,903 -Other fees and commissions 1,602 1,471 1,047 3,064

70,512 55,008 60,825 49,574


ZENITH BANK PLC


Group Bank


9. Fee and commission income (continued)

The fees and commission income reported above excludes amount included in determining effective interest rates onassets or liabilities that are not carried at fair value throught profit or loss.

10. Trading income

Foreign exchange trading income 14,074 4,263 14,062 4,260Treasury bill trading income 1,467 778 1,467 778Bond trading income 336 64 336 39

15,877 5,105 15,865 5,077

Foreign exchange trading income is principally made up of trading income on foreign currencies, as well as gains andlosses from revaluation of trading position. The amount reported above are totally from financial assets carried at fair valuethrought profit or loss.

11. Other income

Dividend income from equity investments 455 303 455 303Gain on disposal of property and equipment 153 151 151 124Gain on disposal of subsidiary 510 - 7,033 -Income on cash handling 246 227 246 227Rental income - 73 - 73Foreign currency revaluation gain 2,168 3,745 2,269 1,566

3,532 4,499 10,154 2,293

Revaluation income includes realised revaluation gain.

12. Operating expenses

Auditors' remuneration 460 420 391 329Directors' emoluments (see note 39) 630 675 425 429Deposit insurance premium 9,375 8,279 9,375 8,279Professional fees 2,671 1,891 2,347 1,621Training and development 2,322 1,421 2,215 1,339Information technology 3,368 3,389 3,126 3,154Operating lease 2,529 2,496 1,928 1,882Advertisement 4,543 3,370 4,419 3,241Bank charges 853 1,166 753 1,025Fuel and maintenance 10,629 9,472 8,812 8,604Insurance 1,287 1,335 1,225 1,280Licenses, registrations and subscriptions 2,457 2,383 2,323 2,242Travel and hotel expenses 1,348 1,154 989 824Printing and stationery 956 1,148 736 948Security and cash handling 10,373 12,609 10,224 12,480Expenses on electronic products 4,218 2,954 4,096 2,892AMCON premium 14,393 17,553 14,393 17,553Telephone and postages 2,372 2,229 2,372 2,229Corporate promotions 1,008 1,028 1,008 1,028Other expenses 5,775 1,555 4,209 687

81,567 76,527 75,366 72,066


ZENITH BANK PLC


Group Bank


13. Taxation

Major components of the tax expense

(a) Minimum tax expense (see note(c)(i) below) - 2,663 - 2,663

(b) Income tax expenseCorporate tax 8,512 4,363 4,174 -Information technology tax 1,068 941 1,068 941Excess dividend tax (see note (c)(ii) below) 13,299 11,773 13,299 11,773Prior year over provision 1,628 - 1,628 -Education tax 826 - 826 -CGT on Subsidiary disposal 708 - 708 -

Current income tax - current period 26,041 17,077 21,703 12,714Origination/reversal of temporry deferred tax differences (5,700) (5,119) (6,333) (4,683)

Income tax expense from continuing operations 20,341 11,958 15,370 8,031Income tax from discontinued operations - 658 - -

Total income tax 20,341 12,616 15,370 8,031

The movement in the current income tax payablebalance is as follows:At start of the year 7,017 6,577 5,266 5,071Tax paid(continuing operations) (23,649) (18,690) (19,260) (15,182)Tax effect of translation - (610) - -Minimum tax - 2,663 - 2,663Income tax charge 26,674 17,077 21,703 12,714

At end of the year 10,042 7,017 7,709 5,266

c (i) The bank was assessed based on the minimum tax legislation for the year ended 31 December 2013 because of a taxexemption granted via Companies Income Tax (Exemption of Bonds and Short Term Government Securities) Order, 2011as contained in a gazette issued by the President of the Federal Republic of Nigeria, which took effect from 2 January 2012.

The Order exempts all interests earned on Bonds (Federal, state, local and corporate bodies including supra-nationals) andother short term securities such as Treasury Bills and Promissory Notes from being subjected to tax imposed under theCompanies Income Tax Act. The Order is valid for a period of 10 years from the effective date of the Order, except forBonds issued by the Federal Government, which will continue to enjoy the exemption.

A significant portion of the Bank’s income derives from short-term securities and government bonds, and as a result, theBank’s current income tax assessment for the year under review yields a tax credit in its favour. Consequently, the Bankhas applied the provisions of the Companies Income Tax Act that mandate a minimum tax assessment, where a tax payerdoes not have any tax liability arising from its tax assessment.

c(ii) During the year, the Bank was liable to excess dividend tax of N16.48 billion, representing 30% of N54.9 billion dividendpaid as the Nigerian tax laws requires companies to pay tax calculated at 30% of the higher of taxable profit and dividendpaid. However, in the 2013 financial statements, the Bank only accrued for tax of N2.66 billion (see note 13a above) basedon minimum tax rule, as the Bank did not have taxable profit and the dividend was not yet approved as at the reportingdate. Therefore, total income tax paid in 2014 was N15.96 billion, which was net of tax credits amounting to N 0.521 billion.The difference between total tax paid and minimum tax accrued which amounted to N13.3 billion (see note 13b above) wascharged as tax expense in 2014 financial statements.


ZENITH BANK PLC


Group Bank


13. Taxation (continued)

Reconciliation of effective tax rate

Profit before income tax 119,796 110,597 107,849 94,108

Tax calculated at the weighted average Group rate of30% (2013: 30%)

35,939 33,179 32,355 28,232

Tax effect of adjustments on taxable incomePrior year under provision 1,628 - 1,628 -Effect of tax rates in foreign jurisdictions - (610) - -Non-deductable expenses 7,825 5,284 6,446 4,496Tax exempt income (26,084) (32,262) (26,084) (32,159)Balancing charge 50 41 50 41Tax loss effect - (328) (8) (328)Tax effect Information technology levy (320) (283) (320) (282)Information technology levy 1,068 941 1,068 941Deferred tax (6,333) (5,119) (6,333) (4,683)Excess dividend tax paid 13,299 11,773 13,299 11,773Minimum tax - 2,663 - 2,663Utilised capital allowance (8,265) - (8,265) -Education tax 826 - 826 -CGT on disposal of subsidiary 708 - 708 -

Tax expense 20,341 15,279 15,370 10,694

Tax charge as a percentage of profit before tax % % % %Tax rate computation 13.00 13.80 14.30 11.40Effect of tax rates in foreign jurisdictions - 1.00 - -Non-deductible expenses (6.00) (4.80) (6.00) (4.80)Tax exempt income 25.50 29.20 24.20 34.20Balancing charge - (0.09) - -Tax loss effect - 0.30 - 0.30Tax effect Information technology levy 0.30 0.30 0.30 0.30Information technology tax levy (1.00) (0.90) (1.00) (1.00)Deferred tax 5.90 4.60 5.90 5.00Excess dividend tax paid (12.30) (10.60) (12.30) (12.50)Minimum tax - (2.40) - (2.80)Utilised capital allowance 7.70 - 7.70 -Prior year under provision (1.50) - (1.50) -Education tax (0.80) - (0.80) -CGT on disposal of subsidiary (0.70) - (0.70) -

Standard rate of tax 30 30 30 30


ZENITH BANK PLC


Group Bank


14. Discontinued operations

Profit for the year from discontinued operationsInterest and similar income - 2,349 - -

Net interest income - 2,349 - -Impairment charge for credit losses - (109) - -

Net interest income after impairment charge for creditlosses

- 2,240 - -

Fee and commission income - 253 - -Underwriting profit - 4,270 - -

Gross premium income - 10,527 - -Reinsurances/ coinsurances - (2,550) - -Net premiums underwritten - 7,977 - -Commission earned - 644 - -Claims recovered - 2,367 - -Claim expenses - (5,208) - -Acquisition costs - (1,344) - -Transfer to/ (from) profit and loss - (166) - -

Other income - 180 - -Operating expenses - (2,555) - -

Profit before tax on discontinued operations - 4,388 - -Taxation - (658) - -

Profit after tax on discontinued operations - 3,730 - -

Basic earnings per share (discontinued operations) k- k12 - -

In 2011 the Group commmitted to a plan to sell all its non banking susidiaries with the exception of Zenith PensionCustodian Limited. This is in response to the Banking Reforms of the Central Bank of Nigeria which abolished theUniversal Banking Regime in Nigeria. From 2011 to 2013, the subsidiaries designated for disposal were presented asdiscontinued operations in the financial statement. The related assets and liabilities of the discontinued operations wereclassified as held for sale and were disclosed in notes 27 and 35 respectively of those financial statement. In 2014, thesubsidiaries held for sale were substantially disposed leaving 19% holding in Zenith General Insurance Limited and 10% inboth Zenith Capital Limited and Zenith Securities Limited. Subsequently, Zenith General Insurance Limited has beendesignated as investement carried at fair value through other comprehensive income and others designated as other equityinstruments at cost.

15. Earnings per share

Basic earnings per share

Basic earnings per share (EPS) is calculated by dividing the net profit attributable to shareholders by the weighted averagenumber of ordinary shares in issue during the year. Where a stock split or bonus share issue has occurred, the number ofshares in issue in the prior year is adjusted to achieve comparability.

Profit attributable to shareholders of the Bank (totaloperations) (N'million) 99,275 94,576 92,479 83,414

Profit attributable to shareholders of the Bank(continuing operations) (N'million)

99,275 91,411 92,479 83,414

Number of shares in issue at end of the period(millions)

31,396 31,396 31,396 31,396

Weighted average number of ordinary shares in issue(millions)

31,396 31,396 31,396 31,396

Basic and diluted earnings per share (total operations) 316k 301k 295k 266k

Basic and diluted earnings per share (continuingoperations)

316k 291k 295k 266k

Basic and diluted earnings per share are the same as there are no dilutive shares.


ZENITH BANK PLC


Group Bank


16. Cash and balances with central banks

Cash and cash equivalents consist of:

Cash 70,084 44,512 63,792 38,521Operating accounts with Central Banks 174,350 210,646 156,424 200,646Mandatory reserve deposits with central bank (cashreserves) 508,146 348,693 508,075 348,626

752,580 603,851 728,291 587,793

Mandatory reserve deposits with central banks represents a percentage of customers' deposits ( prescribed from time totime by the central bank) which are not available for daily use. For the purposes of the Statement of cashflow, this balanceis excluded from cash and cash equivalents.

Credit quality of cash at bank and short term deposits, excluding cash on hand

The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impairedcan be assessed by reference to external credit ratings (if available) or historical information about counterparty defaultrates.

17 Treasury bills

Treasury bills (FVTPL) 1,162 - 1,162 -Treasury bills (Amortized cost) 294,235 579,511 252,252 565,668

295,397 579,511 253,414 565,668

Classified as:Current 295,397 579,511 253,414 565,668Non-current - - - -

295,397 579,511 253,414 565,668

The following treasury bills have maturities less thanthree months and are classified as cash and cashequivalents for purposes of the statements of cashflows (Note 44). 214,721 354,834 181,498 352,786

18. Assets pleged as collateral

Treasury bills 85,601 6,930 85,601 6,930Government bonds 66,145 - 66,145 -

151,746 6,930 151,746 6,930

The above Assets were pledged as collateral to Nigeria interbank Settlement System (NIBBS), Federal Inland RevenueServices, V-Pay, E-Trazact International Limited, Interswitch Limited, the bank of industries (Nigeria) for on-lending facilities,J P morgan.

19. Due from other banks

Current balances with banks within Nigeria 54 11,384 - -Current balances with banks outside Nigeria

274,380 109,791 322,216 152,267Placements with banks and discount houses 232,134 135,554 147,923 97,257

506,568 256,729 470,139 249,524


ZENITH BANK PLC


Group Bank


Classified as:Current 505,882 - 469,454 -Non-current 686 256,729 685 249,524

506,568 256,729 470,139 249,524

b. Included in balances with banks outside Nigeria is the amount of N84.88 billion and N84.85 billion for the Group andBank respectively (2013: N32.28 billion for both Group and Bank) which represents the Naira value of foreign currencybalances held on behalf of customers in respect of letters of credit. The corresponding liabilities are included in otherliabilities (See Note 31). These balances are not available for the day to day operations of the Group.

20. Derivative assets

Non-hedging derivative assets and liabilities

The Group enters into currency forward contracts with counterparties. On initial recognition, the Group estimates the fairvalue of derivatives transacted with the counterparties using valuation techniques. In many cases, all significant inputs intothe valuation techniques are wholly observable-e.g with reference to similar transactions in the wholesale dealer market.

During the year, various forward contracts entered into by the Group generated net gains of N10.83billion which wererecognized in the statement of comprehensive income. These net gains related to the fair value of the forward contracts,producing derivative assets and liabilities of 16.9bn and 6.07bn respectively.

Derivative assets held for risk management purposes

The Group used cross-currency swaps to hedge its foreign currency risks arising from its indebtedness in foreign currency.Included in the derivative assets in note is the fair value of the swap derivative at the reporting date.

During the year, net gains after tax of N512m (GH¢ 8.55M) relating to the fair value of the swap were recognized in thestatement of comprehensive income against swap exposure of USD 200M (2013: USD 225M) at the reporting date. The fairvalue gains were also reported as part of the derivative assets.

All derivative assets are current.

21. Loans and advances

Overdrafts 493,463 351,642 451,318 321,361Term loans 1,171,848 858,389 1,061,373 761,183On-lending facilities 80,024 52,693 80,024 52,693Advances under finance lease 13,000 13,398 12,866 13,141

Gross loans and advances to customers 1,758,335 1,276,122 1,605,581 1,148,378Less: Allowance for impairment (28,828) (24,767) (25,331) (21,819)

Specific allowances for impairment (10,065) (7,972) (7,480) (5,600)Collective allowance for impairment (18,763) (16,795) (17,851) (16,219)

1,729,507 1,251,355 1,580,250 1,126,559

Overdrafts

Gross Overdrafts 493,463 351,642 451,318 321,361Less: Allowances for impairment (19,943) (15,634) (16,445) (12,890)


473,520 336,008 434,872 308,471


ZENITH BANK PLC


Group Bank


Term loans

Gross Term loans 1,171,848 858,389 1,061,373 761,510Less: Allowances for impairment (8,432) (8,280) (8,432) (8,076)


1,163,416 850,109 1,052,941 753,434

On-lending facilities

Gross On-lending facilities 80,024 52,693 80,024 52,693Less: Allowances for impairment (397) (714) (397) (714)

Specific allowances for impairment - (179) - (179)Collective allowance for impairment (397) (535) (397) (535)

79,627 51,979 79,627 51,979

Advances under finance lease

Net investment in finance lease 13,000 13,398 12,866 13,141Less: collective allowance for impairment (56) (139) (56) (139)

12,944 13,259 12,810 13,002

Gross Loans classified as:

Current 834,524 692,449 692,758 637,875Non-current 923,811 583,673 912,823 510,503

1,758,335 1,276,122 1,605,581 1,148,378


ZENITH BANK PLC

Notes to the Consolidated and Separate Financial Statementsfor the Year Ended 31 December 2014In millions of Naira

Reconciliation of impairment allowance on loans and advances to customers:Group

Overdrafts Term loans On-lendingfacilities

Advances underfinance lease

Total

Balance at 1 January 2014 15,634 8,280 714 139 24,767

Specific impairment 5,867 1,926 179 - 7,972Collective impairment 9,767 6,354 535 139 16,795

Additional impairment for the year (See note 8) 10,929 2,145 - (10) 13,064

Specific impairment - 2,145 - - 2,145Collective impairment 10,929 - - (10) 10,919

Write-backs 347 - - - 347Write-offs (specific) (5,659) (269) - - (5,928)Write-offs (collective) (1,308) (1,724) (317) (73) (3,422)

Balance at 31 December 2014 19,943 8,432 397 56 28,828

Specific impairment 7,372 2,693 - - 10,065Collective impairment 12,571 5,739 397 56 18,763


Specific impairment 9,713 888 - - 10,601Collective impairment 8,183 4,987 857 84 14,111

Additional impairment for the year (See note 8) 8,059 2,774 179 55 11,067

Specific impairment 5,136 990 179 - 6,305Collective impairment 2,923 1,784 - 55 4,762

Write-backs 2 45 - - 47Foreign currency translation and other adjustments (526) 3 - - (523)Write-offs (specific) (8,458) - - - (8,458)Write-offs (collective) (1,339) (417) (322) - (2,078)


* Impaired loans that are not individually significant are included in the collective impairment. Therefore, when such loans are written off, the cumulative impairment on them are taken from the collective

impairment reserve.


ZENITH BANK PLC


Reconciliation of impairment allowance on loans and advances to customers:

Bank

Overdrafts Term loans On-lendingfacilities

Advances underfinance lease

Total


Specific impairment 3,695 1,726 179 - 5,600Collective impairment 9,195 6,350 535 139 16,219

Additional impairment for the year (See note 8) 10,257 2,145 - (10) 12,392

Specific impairment - 2,145 - - 2,145Collective impairment 10,257 - - (10) 10,247

Amounts recovered during the year 347 - - - 347Write-offs (Specific) (5,725) (265) - - (5,990)Write-offs (Collective) (1,323) (1,524) (317) (73) (3,237)


Specific impairment 4,787 2,693 - - 7,480Collective impairment 11,659 5,739 397 56 17,851


Specific impairment 7,634 734 - - 8,368Collective impairment 7,143 4,985 857 84 13,069

Additional impairment for the year (See note 8) 6,899 2,774 179 55 9,907

Specific impairment 3,508 992 179 - 4,679Collective impairment 3,391 1,782 - 55 5,228

Write-offs (Specific) (7,447) - - - (7,447)Write-offs (Collective) (1,339) (417) (322) - (2,078)


* Impaired loans that are not individually significant are included in the collective impairment. Therefore, when such loans are written off, the cumulative impairment on them are taken from the collective

impairment reserve.


ZENITH BANK PLC


Group Bank


Advances under finance lease

Gross investment 14,978 19,381 14,824 19,058Less: Unearned income (1,978) (5,983) (1,958) (5,917)

Net Investment 13,000 13,398 12,866 13,141

The net investment may be analysed as follows:No later than 1 year 1,947 2,177 1,925 2,062Later than 1 year and no later than 5 years 11,053 11,221 10,941 11,079

13,000 13,398 12,866 13,141

Reconciliation of gross investment to minimumlease rental paymentsGross investment 18,808 19,381 18,659 19,058Less: Unearned income (5,808) (5,983) (5,793) (5,917)

Net Investment 13,000 13,398 12,866 13,141Impaiment on leases (66) (139) (66) (139)

Present value of minimum lease payments 12,934 13,259 12,800 13,002

The nature of security in respect of loans and advancesis as follows:Secured against real estate 215,506 177,379 214,165 152,379Secured by shares of quoted companies 4,814 32,482 4,814 17,482Cash collateral, lien over fixed and floating assets,e.t.c 1,016,830 838,422 867,594 788,422Unsecured 521,185 227,839 519,008 190,095

1,758,335 1,276,122 1,605,581 1,148,378


ZENITH BANK PLC


Group Bank


22. Investment securities

Analysis of investmentsDebt securities (measured at amortised cost) 186,544 290,191 79,469 201,280Debt securities (measured at fair value through profit orloss) - 2,280 - 589Equity securities (measured at fair value through other

comprehensive income) 13,535 10,654 13,363 10,654

200,079 303,125 92,832 212,523

Classified as:Current 94,065 110,290 55,293 103,633Non-current 106,014 192,835 37,539 108,890

200,079 303,125 92,832 212,523

The Group holds equity investments unquoted entities which the Group has elected to carry at fair value through othercomprehensive income. These investments are held for strategic purposes rather than for trading purposes.

(b.) Movement in investment securities

The movement in investment securities may be summarised as follows:

Group

Debtsecurities at

fair valuethrough profit

and loss

Debtsecurities atamortised

cost

Equitysecurities at

fair valuethrough other

comprehensiveincome

Total

At 1 January 2014 2,280 290,191 10,654 303,125Exchange differences (25) (1,415) - (1,440)Additions - 58,195 - 58,195Disposals (sale and redemption) (2,591) (178,796) - (181,387)Gains from changes in fair value recognised in profitor loss

336 - 332 668

Gains from changes in fair value recognised in othercomprehensive income

- - 2,549 2,549

Interest accrued - 31,997 - 31,997Coupon received - (13,628) - (13,628)

At 31 December 2014 - 186,544 13,535 200,079

At 1 January 2013 - 289,938 9,405 299,343Exchange differences 71 (1,318) - (1,247)Additions 172,320 109,387 700 282,407Disposals (sale and redemption) (170,178) (112,101) - (282,279)Gains from changes in fair value recognised in profit orloss (Note10) 64 - - 64Gains from changes in fair value recognised in othercomprehensive income - - 549 549Interest accrued 166 35,947 - 36,113Coupon received (163) (31,662) - (31,825)

At 31 December 2013 2,280 290,191 10,654 303,125


ZENITH BANK PLC


Group Bank


The movement in investment securities may be summarised as follows:

Bank

Debtsecurities at

fair valuethrough profit

and loss

Debtsecurities atamortised

cost

Equitysecurities at

fair valuethrough other

comprehensiveincome

Total

At 1 January 2014 589 201,280 10,654 212,523Additions - 46,351 - 46,351Disposals (sale and redemption) (925) (178,796) - (179,721)Gains from changes in fair value recognised in profitor loss

336 - 160 496

Gains from changes in fair value recognised in othercomprehensive income

- - 2,549 2,549

Interest accrued - 23,583 - 23,583Coupon received - (12,949) - (12,949)

At 31 December 2014 - 79,469 13,363 92,832

At 1 January 2013 - 247,500 9,405 256,905Additions 169,217 53,408 700 223,325Disposals (sale and redemption) (168,670) (99,329) - (267,999)Gains from changes in fair value recognised in profit orloss 39 - - 39Gains from changes in fair value recognised in othercomprehensive income - - 549 549Interest accrued 166 26,322 - 26,488Coupon received (163) (26,621) - (26,784)

At 31 December 2013 589 201,280 10,654 212,523

23. Investment in subsidiaries

The following table lists the entities which are controlled by the group, either directly or indirectly through subsidiaries.

Bank

Name of company 2014Ownershipinterest %

Carryingamount 2014

Carryingamount 2013

Zenith Bank (Ghana) Limited 98.0700 6,444 6,444Zenith Bank (UK) Limited 100.0000 21,482 13,307Zenith Bank (Sierra Leone) Limited 99.9900 2,059 1,606Zenith Bank (Gambia) Limited 99.9600 1,038 1,038Zenith Pensions Custodian Limited 99.0000 1,980 1,980

33,003 24,375

All investments in subsidiaries are non-current.


ZENITH BANK PLC


23. Investment in subsidiaries (continued)

b. Condensed results of consolidated entities from continuing operations

In millions of Naira31 December 2014

Zenith Group Eliminationentries

Zenith BankPlc

Zenith BankGhana

Zenith BankUK

Zenith BankSierraLeone

Zenith BankGambia

ZenithPension

CustodianCondensed statement of profit or lossOperating income 403,343 (5,121) 372,015 25,128 10,622 816 686 5,720Income from equity accounted investments 138 - - - - - - -Operating expenses (270,621) 5,121 (251,774) (14,076) (7,454) (1,084) (548) (806)Provision expense (13,064) - (12,392) (666) - (4) (2) -

Profit before tax 119,796 - 107,849 10,386 3,168 (272) 136 4,914Taxation (20,341) - (15,370) (2,987) (768) (2) (58) (1,156)

Profit for the year 99,455 - 92,479 7,399 2,400 (274) 78 3,758

Condensed statement of financial positionAssetsCash and balances with central banks 752,580 - 728,291 22,023 10 1,124 1,128 4Treasury bills 295,397 1 253,414 33,226 - 6,721 2,035 -Assets pledged as collateral 151,746 - 151,746 - - - - -Due from other banks 506,568 (89,629) 470,139 14,578 90,841 3,655 1,875 15,109Derivative asset held for risk management 17,408 - 16,896 512 - - - -Loans and advances 1,729,507 - 1,580,250 70,082 77,895 816 464 -Investment securities 200,079 171 92,832 43,630 63,446 - - -Investment in subsidiaries - (33,003) 33,003 - - - - -Investments in associates 302 212 90 - - - - -Deferred tax asset 6,449 76 6,333 - 40 - - -Other assets 21,455 (63,983) 19,393 414 64,903 144 98 486Property, plant and equipment 71,571 - 69,531 1,205 100 277 201 257Intangible assets 2,202 - 1,901 - 195 4 60 42

3,755,264 (186,155) 3,423,819 185,670 297,430 12,741 5,861 15,898


ZENITH BANK PLC





Zenith BankPlc

Zenith BankGhana

Zenith BankUK


Zenith BankGambia

ZenithPension

CustodianLiabilities & EquityCustomer deposits 2,537,311 (15,108) 2,265,262 157,972 114,007 11,016 4,162 -Derivative liabilities 6,073 - 6,073 - - - - -Current income tax 10,042 - 7,709 1,123 - 15 45 1,150Deferred income tax liabilities - (394) - 340 - - 34 20Other liabilities 289,858 (132,225) 272,726 5,642 142,742 266 561 146On-lending facilities 68,344 - 68,344 - - - - -Borrowings 198,066 - 198,066 - - - - -Debt securities issued 92,932 - 92,932 - - - - -Equity and reserves 552,638 (29,136) 512,707 21,063 34,408 1,444 1,059 11,093

3,755,264 (176,863) 3,423,819 186,140 291,157 12,741 5,861 12,409

Condensed cash flowNet cash from operating activities (20,037) (29,986) (51,884) 12,925 38,851 4,485 1,431 4,141Net cash from financing activities 95,300 (5,779) 91,789 - 9,290 - - -Net cash from investing activities 1,473 18,005 (9,529) (468) (6,733) 513 (40) (275)

Increase in cash and cash equivalents 76,736 (17,760) 30,376 12,457 41,408 4,998 1,391 3,866

Cash and cash equivalentsAt start of year 866,721 (47,274) 841,477 23,883 36,045 6,479 1,593 4,518Cash and cash equivalents from discontinued operations 24,595 24,595 - - - - - -Exchange rate movements on cash and cash equivalents (2,329) (2,329) - - - - - -At end of year 965,723 (42,768) 871,853 36,340 77,453 11,477 2,984 8,384

76,736 (17,760) 30,376 12,457 41,408 4,998 1,391 3,866

- - - - - - - -


ZENITH BANK PLC





Zenith BankPlc

Zenith Bank(Ghana)Limited

Zenith Bank(UK) Limited


Limited

Zenith Bank(Gambia)Limited

ZenithPension

CustodianLimited

Condensed statement of profit or lossOperating income 335,150 (6,307) 309,371 17,745 8,473 795 585 4,484Share of profit of associate 118 - - - - - - -Dividends received - - 1,904 - - - - -Operating expenses (217,992) 6,308 (207,260) (10,030) (5,489) (664) (524) (287)Provision expense (11,067) - (9,907) (1,139) - - (21) -

Profit before tax 106,209 1 94,108 6,576 2,984 131 40 4,197Taxation (14,621) - (10,695) (2,275) (648) (45) (32) (926)

Profit for the year 91,588 1 83,413 4,301 2,336 86 8 3,271

Condensed statement of financial positionAssetsCash and balances with central banks 603,851 (3,004) 587,793 8,892 8,775 992 403 -Treasury bills 579,511 - 565,668 8,517 468 3,212 1,646 -Assets pledged as collateral 6,930 - 6,930 - - - - -Due from other banks 256,729 (61,651) 249,524 18,162 34,660 3,491 1,162 11,381Derivative asset held for risk management 2,681 - - - - - - -Loans and advances 1,251,355 1,982 1,126,559 46,271 74,961 738 844 -Assets classified as held for sale 30,454 25,705 4,749 - - - - -Investment securities 303,125 - 212,523 41,070 49,532 - - -Investment in subsidiaries - (24,375) 24,375 - - - - -Investments in associates 165 75 90 - - - - -Deferred tax asset 749 670 - 40 39 - - -Other assets 36,238 (55,604) 31,415 3,373 56,380 216 67 391Property, plant and equipment 69,410 2 67,364 1,249 135 313 213 134Intangible assets 1,935 (1) 1,703 - 125 8 59 41

3,143,133 (116,201) 2,878,693 127,574 225,075 8,970 4,394 11,947


ZENITH BANK PLC





Zenith BankPlc

Zenith Bank(Ghana)Limited

Zenith Bank(UK) Limited

Zenith Bank(SierraLeone

) Limited

Zenith Bank(Gambia)Limited

ZenithPension

CustodianLimited

Liabilities & EquityCustomer deposits 2,276,755 (17,827) 2,079,862 111,474 92,723 7,592 2,931 -Liabilities classified as held for sale 14,111 14,111 - - - - - -Current income tax 7,017 - 5,266 726 - 45 19 961Deferred income tax liabilities 678 670 - - - - - 8Other liabilities 215,643 (100,449) 201,265 1,191 112,676 310 495 155On-lending facilities 59,528 - 59,528 - - - - -Borrowings 60,150 - 60,150 - - - - -Equity and reserves 509,251 (12,707) 427,622 16,865 19,676 1,023 949 10,823

3,143,133 (116,202) 2,833,693 130,256 225,075 8,970 4,394 11,947

Condensed cash flowNet cash from operating activities 265,580 (35,630) 235,619 39,776 14,336 5,493 394 5,592Net cash from financing activities (1,704) (195) (1,760) - - 251 - -Net cash from investing activities (10,526) 44,770 (5,782) (41,075) (9,236) 172 140 485

Increase in cash and cash equivalents 253,350 8,945 228,077 (1,299) 5,100 5,916 534 6,077

Cash and cash equivalentsAt start of year 614,817 (45,651) 613,400 33,165 4,143 1,779 2,677 5,304Cash and cash equivalents from discontinued operations 143 143 - - - - - -Exchange rate movements on cash and cash equivalents (1,589) (1,589) - - - - - -At end of year 866,721 (38,152) 841,477 31,866 9,243 7,695 3,211 11,381

253,350 8,945 228,077 (1,299) 5,100 5,916 534 6,077


ZENITH BANK PLC


Group Bank



Apart from Zenith Bank Pensions Custodian Limited which is incorporated in Nigeria, the remainning subsidiaries areincorporated in their respective countries.

Zenith Bank (Ghana) Limited provides Corporate and Retail Banking services. It was incorporated on April 15, 2005 andcommenced operations on September 16, 2005.

Zenith Pensions Custodian Limited provides pension funds custodial services to Licensed Pension Fund Administrators(PFAs) and Closed Pension Funds Administrators under the Pension (Reform) Act, 2004. It was incorporated on 1 March2005. The name was changed from "Zenith Pensions Limited" to "Zenith Pensions Custodian Limited" on September 20,2005. It was licensed by the National Pension Commission as a custodian of pension funds and assets on 7 December2005 and commenced operations in December 2005 .

Zenith Bank (UK) Limited provides a range of commercial, wholesale, investment, retail banking and financial services inthe United Kingdom. It was incorporated on 17 February 2006 and commenced operations on 30 March 2007.

Zenith Bank (Sierra Leone) Limited provides Corporate and Retail Banking services. It was incorporated in Sierra Leoneon 17 September 2007 and granted an operating license by the Bank of Sierra Leone on 10 September 2008. Itcommenced banking operations on 15 September 2008. This subsidiary was tested for impairment, and was not impaired.

Zenith Bank (Gambia) Limited provides corporate and retail banking services. It was incorporated in The Gambia on 24October 2008 and granted an operating licence by the Central Bank of Gambia on 30 December 2009. It commencedbanking operations on 18 January 2010.

24. Investments in associates

The Group's investments under the Small and Medium Enterprises Equity Investment Scheme ("SMEEIS") is in compliancewith the Policy Guidelines for 2001 Fiscal Year (Monetary Policy Circular No. 35). The Group generally holds 20 percent ormore of the voting power of the investee and is therefore presumed to have significant influence over the investee. Ininstances where the Group holds less than 20 percent of the voting power of the investee, the Group concluded that it hassignificant influence due to the Group's representation on the board of the relevant investee, with such board generallylimited to a small number of board members.

Group Bank 2014 2013 2014 2013

Gross investment 1,312 1,822 1,312 1,822Share of profit/(loss) b/f 74 (43) - -Share of profit:(current year) 138 118 - -Disposals - (510) - (510)Diminution in investment (1,222) (1,222) (1,222) (1,222)

Balance at end of the year 302 165 90 90

Classified as:Current - - - -Non-current 302 165 90 90

302 165 90 90

There were no published price quotations for any associates of the Group. Furthermore, there are no significant restrictionson the ability of associates to transfer funds to the Group in the form of cash dividends or repayment of loans andadvances.The aggregate summary of results of the immaterial associates are presented below.

Summarised financial information of associates

The aggregate amounts of assets, liabilities, revenue and profits of associates are shown below;

In millions of Naira 2014 2013Total assets 9,567 12,355Total liabilities 7,685 7,599Total revenue 20,381 15,874Profit before tax 3,567 2,551


ZENITH BANK PLC


25. Deferred tax assets

Group

AssetsMovements in temporary differences during the year: 1 January

2014 Recognised

in profit or loss31 December

2014Property and equipment - (3,379) (3,379)Allowances for loan losses - 4,357 4,357Unutilized capital allowances - 5,355 5,355Tax loss carry forward 749 (633) 116

749 5,700 6,449

Reversal of timing difference 749 5,700 6,449

Movements in temporary differences during theyear:

1 January2013

Recognisedin profit or loss

Recognised in OCI

31 December2013

Tax loss carry forward 432 317 - 749

432 317 - 749

Reversal of timing difference (Note 13) - - - -

LiabilitiesMovements in temporary differences during the year: 1 January

2014 Recognised

in profit or loss31 December

2014Property and equipment (3) 3 -Other assets 11 (11) -Foreign exchange differences (90) 90 -Effective Portion of change in fair value of cash flow hedge 760 (760) -

678 (678) -

Reversal of timing difference 678 (678) -


1 January2013


Recognised in OCI

31 December2013

Property and equipment 9,995 (9,998) - (3)Other assets 11 - - 11Allowances for loan losses (5,312) 5,312 - -Equity securities at fair value 890 - (890) -Foreign exchange differences - - (90) (90)Effective Portion of change in fair value of cash flowhedge

- - 760 760

5,584 (4,686) (220) 678

Reversal of timing difference (Note 13) - - - -


ZENITH BANK PLC


25. Deferred tax assets (continued)

Bank


1 January2014


Recognised in OCI

31 December2014

Property and equipment - 3,379 - 3,379Allowances for loan losses - (4,357) - (4,357)Unutilized capital allowances - (5,355) - (5,355)

- (6,333) - (6,333)


1 January2013


Recognised in OCI

31 December2013

Property and equipment 9,995 (9,995) - -Allowances for loan losses (5,312) 5,312 - -Equity securities at fair value 890 - (890) -

5,573 (4,683) (890) -

26. Other assets

Prepayments 13,214 14,265 12,317 13,064Other receivables 12,878 26,610 11,713 22,988

Gross other assets 26,092 40,875 24,030 36,052Less: Specific impairment (4,637) (4,637) (4,637) (4,637)

21,455 36,238 19,393 31,415

Current 26,092 40,875 24,030 36,052Non-current - - - -

26,092 40,875 24,030 36,052

Movement in specific impairment:

At start of the year 4,637 4,637 4,637 4,637Charges for the year - - - -

At end of the year 4,637 4,637 4,637 4,637


ZENITH BANK PLC


Group Bank


27. Assets classified as held for sale

Assets and liabilities

Investment in subsidiaries - - - 4,749Cash and balances with central banks - 500 - -Treasury bills - 11,076 - -Due from other banks - 11,875 - -Loans and advances - 59 - -Reinsurance assets and insurance receivables - 1,112 - -Investment securities - 2,915 - -Deferred tax assets - 1 - -Other assets - 1,861 - -Property and equipment - 1,026 - -Intangible assets - 29 - -

- 30,454 - 4,749

In 2011 the Group commmitted to a plan to sell all its non banking susidiaries with the exception of Zenith PensionCustodian Limited. This is in response to the Banking Reforms of the Central Bank of Nigeria which abolished the UniversalBanking Regime in Nigeria. From 2011 to 2013, the subsidiaries designated for disposal were presented as discontinuedoperations in the financial statement. The related assets and liabilities of the discontinued operations were classified asheld for sale, the subsidiaries held for sale were substantially disposed leaving 19% holding in Zenith General InsuranceLimited and 10% in both Zenith Capital Limited and Zenith Securities Limited. Subsequently, Zenith General InsuranceLimited has been designated as investement carried at fair value through other comprehensive income and othersdesignated as other equity instruments at cost.


ZENITH BANK PLC


28. Property and equipment

Group

Leaseholdland

Buildings Leaseholdimprovements

Furniture andfittings andequipment

Computerequipment

Motor Vehicles Work inprogress

Total

CostAt start of the year 16,470 20,762 13,506 38,036 22,423 15,264 16,869 143,330Additions 1,041 1,617 627 3,546 726 1,786 2,889 12,232Reclassifictions 146 521 53 43 (6) 7 (764) -Disposals - (2) (3) (847) (11) (1,135) - (1,998)Foreign exchange movements - (324) (496) (233) (214) (75) (204) (1,546)

At the end of the year 17,657 22,574 13,687 40,545 22,918 15,847 18,790 152,018

Leaseholdland

Buildings Leaseholdimprovements

Furniture andfittings andequipment

Computerequipment

Motor Vehicle Work inprogress

Total

Accumulated DepreciationAt start of the year 1,352 3,076 10,884 27,523 20,213 10,872 - 73,920Charge for the year 170 564 1,181 4,010 1,224 1,938 - 9,087Reclassifications - 71 (66) (8) (9) 12 - -Disposals - - (2) (782) (11) (1,124) - (1,919)Foreign exchange movements (1) (137) (455) (122) (109) 182 - (642)

At the end of the year 1,521 3,574 11,543 30,621 21,308 11,880 - 80,447

Net book amountAt 31 December 2014 16,136 19,000 2,144 9,924 1,610 3,967 18,790 71,571

At 31 December 2013 15,118 17,686 2,622 10,513 2,210 4,392 16,869 69,410

There were no impairment losses on any class of property and equipment during the year (2013 :NIL)

There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (2013:Nil).

All property and equipment are non current.

Non of the groups assets were financed from borrowings, consequently no borrowing cost has been capitalized as part of asset cost.


ZENITH BANK PLC


28 Property and equipment

BankLeasehold land Buildings Leasehold

improvementsFurniture

fittings andequipment

ComputerEquipment

Motor Vehicle Work inprogress

Total

CostAt start of the year 16,470 20,419 11,689 36,805 21,394 14,450 16,655 137,882Additions 1,041 1,472 501 3,238 512 1,550 2,387 10,701Reclassificatios 146 383 (43) 21 (14) 4 (497) -Disposals - (2) (2) (743) (8) (1,060) - (1,815)

At the end of the year 17,657 22,272 12,145 39,321 21,884 14,944 18,545 146,768

Accumulated depreciation

Leasehold land Buildings Leaseholdimprovements

Furniturefittings andequipment

Computerequipment

Motor vehicle Work inprogress

Total

At start of the year 1,351 3,063 9,741 26,594 19,394 10,373 - 70,516Charge for the year 170 427 994 3,791 1,167 1,868 - 8,417Reclassifications - 66 (61) (3) (5) 21 - 18Disposals - - (2) (731) (8) (973) - (1,714)

At the end of the year 1,521 3,556 10,672 29,650 20,548 11,290 - 77,237

Net book amountAt 31 December 2014 16,136 18,716 1,473 9,671 1,336 3,654 18,545 69,531

At 31 December 2013 15,118 17,357 1,948 10,210 2,000 4,077 16,654 67,364

There were no impairment losses on any class of property and equipment during the year (2013 :NIL)

There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (2013:Nil).

All property and equipment are non current.

Non of the groups assets were financed from borrowings, consequently no borrowing cost has been capitalized as part of asset cost


ZENITH BANK PLC


Group Bank


29. Intangible assets

Computer software

CostAt start of the year 5,159 3,661 4,353 2,981Exchange difference 36 18 - -Reclassification - 59 - 59Additions 947 1,421 902 1,313

At end of the year 6,142 5,159 5,255 4,353

Accumulated depreciationAt start of the year 3,224 2,255 2,650 1,806Exchange difference (12) 18 - -Charge for the year 728 951 704 844

At the end of the year 3,940 3,224 3,354 2,650

Carrying amount at end of the year 2,202 1,935 1,901 1,703

All intangible assets are non current

30. Customers' deposits

Demand 1,292,394 1,293,778 1,102,904 1,229,706Savings 213,435 192,281 191,097 174,184Term 461,551 439,466 432,871 419,751Domiciliary 569,931 286,895 538,390 256,221Deposit from banks - 64,335 - -

2,537,311 2,276,755 2,265,262 2,079,862

Classified as:Current 2,537,311 2,276,755 2,265,262 2,079,862Non-current - - - -

2,537,311 2,276,755 2,265,262 2,079,862

31. Other liabilities

Customer deposits for letters of credit 84,878 32,276 84,847 32,276Settlement payables 5,685 14,094 5,182 13,841Managers' cheques 12,156 13,063 11,833 12,659Due to banks for clean letters of credit 130,680 98,743 130,680 98,743Customers' funds for foreign currency purchases 8 2,963 - 2,927Deferred income on financial guarantee contracts 254 389 254 349Tax collections 1,553 1,336 1,473 1,289Sales and other collections 9,029 19,272 9,029 19,272Premium payables 9,654 - 9,654 -Electronic card related payables 1,805 1,708 1,811 1,701Customer's foreign transactions payables 11,608 12,878 10,326 12,878Other payables 22,548 18,921 7,637 5,330

289,858 215,643 272,726 201,265

Classified as:

Current 278,721 194,512 263,841 183,283Non-current 11,137 21,131 8,885 17,982

289,858 215,643 272,726 201,265


ZENITH BANK PLC


Group Bank


31. Other liabilities (continued)

The amounts above for financial guarantee contracts represents the amounts initially recognised less cumulativeamortisation.

32. On-lending facilities

This comprises:Central Bank of Nigeria (CBN) Commercial AgricultureCredit Scheme Loan (i)

23,943 29,905 23,943 29,905

Bank of Industry (BOI) Intervention Loan (ii) 30,947 14,417 30,947 14,417Central Bank of Nigeria (CBN) / Bank of Industry(BOI) -Power & Aviation intervention Funds (iii)

13,203 15,206 13,203 15,206

CBN MSMEDF Deposit (iv) 251 - 251 -

68,344 59,528 68,344 59,528

Classified as:Current - 36,673 - 36,673Non-current 68,344 22,855 68,344 22,855

68,344 59,528 68,344 59,528

(i) The fund received under the Central Bank of Nigeria (CBN) Commercial Agriculture Credit Scheme represents a creditline granted to the Bank for the purpose of providing concessionary funding to the agricultural sector. The facility has atenor of 16 years with effect from 2009 to expire by September 2025. The facility attracts an interest of 0% per annum andthe Bank is under obligation to on-lend to customers at an all-in interest rate of not more than 9% per annum. Based on thestructure of the facility, the Bank assumes the default risk of all amounts lent to the Bank's customers.

(ii) The Central Bank of Nigeria (CBN) / Bank of Industry (BOI) - SME / Manufacturing Intervention Fund represents anintervention credit granted to the Bank for the purpose of refinancing / restructuring existing loans to Small and MediumScale Enterprises (SMEs) and Manufacturing Companies. The total facility is secured by Nigerian Government Securities.The maximum tenor for term loan under the programme is 15 years while the tenor for working capital is one year,renewable annually subject to a maximum tenor of five years. A management fee of 1% per annum deductible at source inthe first year, and quarterly in arrears thereafter, is paid by the Bank under the Intervention programme and the Bank isunder obligation to on-lend to customers at an all-in interest rate of 7% per annum. The Bank is the primary obligor to CBN /BOI and assumes the risk of default.

(iii) The purpose of granting new loans and refinancing / restructuring existing loans to companies in the power and aviationindustries. The facility is secured by Irrevocable Standing Payment Order (ISPO). The maximum tenor for term loan underthe programme is 15 years while the tenor for working capital is one year, renewable annually subject to a maximum tenorof five years. The facility attracts an interest of 1% per annum payable quarterly in arrears and the Bank is under obligationto on-lend to customers at an all-in interest rate of 7% per annum.

(iv) The Micro Small & Medium Scale Enterprises Development Fund (MSMEDF) is an intervention fund with the objectiveof channelling low interest funds to the MSME sub-sector of the Nigerian economy. The facility attracts an interest rate of3% per annum and the Bank is under obligation to on-lend to the SMEs at 9% per annum. The maximum tenor is 5 yearswhile the tenor for working capital is 1 year.

For each on lending balance, the outstanding amount payable to the lenders as disclosed in the footnotes, represents theprincipal amount outstanding as at the reporting date, while the amount reported on the statement of financial positioncomprises of the principal amount outstanding, interest payable at the reporting date as well as the effect of carrying themat fair value at initial recognition and amortised cost at subsequent periods.


ZENITH BANK PLC


Group Bank


33. Borrowings

Long term borrowing comprise:Due to ADB (i) 25,672 7,445 25,672 7,445Due to KEXIM (ii) 5,632 3,440 5,632 3,440Due to EIB (iii) 5,111 4,331 5,111 4,331Due to PROPARCO (iv) 14,053 13,264 14,053 13,264Due to SCB (v) 4,166 15,876 4,166 15,876Due to CITIBANK (vi) 18,710 15,794 18,710 15,794Due to ABSA Bank (vii) 18,637 - 18,637 -Due to J P morgan Chase Bank (viii) 27,955 - 27,955 -Due to SCB (ix) 13,977 - 13,977 -Due to First Rand Bank (x) 8,981 - 8,981 -Due to Commerz Bank (xi) 55,172 - 55,172 -

198,066 60,150 198,066 60,150

The Group has not had any defaults of principal, interest or other breaches with respect to their liabilities during the year(2013: nil).

Classified as:Current 72,117 - 72,117 -Non-current 125,949 60,150 125,949 60,150

198,066 60,150 198,066 60,150

Movement in borrowingsAt beginning of the year 60,150 15,138 60,150 15,138Addition during the year 149,626 50,209 149,626 50,209Repayment during the year (11,710) (5,197) (11,710) (5,197)

At end of the year 198,066 60,150 198,066 60,150

(i) The amount due to African Development Bank (AfDB) of N25.7 billion ($137.50 million) represents the outstandingbalance of two tranches of dollar facilities in the sums of $12.5 million and $125million granted by AfDB in May 2010 andSeptember 2014 respectively. The tranches of the facility are repayable over 5 years and 7 years respectively. Interest ispayable half-yearly at the rate of LIBOR + 4.5% per annum and LIBOR + 3.6% per annum respectively. The outstandingbalance of the first tranche of $50 million will mature in February 2015 while the second trancheof $125 million will maturein February 2021.

(ii) The amount of N5.6 billion ($30.3 million) represents the outstanding balance of the $70.6 million short term loan facilityof four tranches granted by The Export-Import Bank of Korea in January, February, May and September 2014. The facility ispriced at LIBOR + 1.65% per annum and will be due for final repayment in January, February, May and September 2015.

(iii) The amount of N5.1 billion ($27.322 million) represents a 6-year dollar facility granted by the European Investment Bank(EIB) in 2013. Interest is payable at the rate of 6 months' LIBOR plus 2.74% per annum. The facility will mature in 2019.

(iv) The amount of N14.0 billion ($76.694 million) represents the outstanding balance of three tranches of the credit facilitiesof $30m, $25m and $50m granted by Promotion et Participation pour la Coopérationéconomique (PROPARCO) in February2010, February 2013 and December 2013 respectively. The facilities are priced at Libor +3.30%, L+3.76% and L+3.71%per annum and will mature in April 2015, April 2020 and April 2021 respectively. Interest on each of the facilities arepayable semi-annually.

(v) The amount of N4.2 billion ($23.81million) represents the outstanding balance of a Dollar Term Loan from StandardChartered Bank with a tenor of 3 years effective from June 21, 2013. The facility which is priced at Libor+3.50% has amaturity date of June 20, 2016. Interest is payable quarterly.

(vi) The amount of N18.7 billion ($100 million) represents a 3-year dollar facility from Citi Bank in December 2013. Interestis payable quarterly at a rate of Libor+3.50%. The maturity date of the facility is December 11, 2016.


ZENITH BANK PLC


Group Bank


(vii) The amount of N18.6 billion($100 million) represents a facility from ABSA Bank with a year tenor and effective fromNovember 10,2014 . Interest is payable quarterly with a pricing of Libor+2.5%. The final maturity date is November 10,2015.

(viii) The amount due to JP Morgan Chase Bank of N27.9 billion ($150.001 million) represents the outstanding balance oftwo tranches of dollar facilities in the sums of $100 million and $50.032million initially granted by JP Morgan in August 2014and October 2014 for a-6 month and 1 month tenor respectively. The second tranche has since been rolled over twice.Interest is payable quarterly at the rate of LIBOR + 2.5% per annum on the first trancheand monthly at LIBOR + 2.25% perannum on the second tranche. The maturity date for the first tranche is March 02, 2015 while the second one matures onFebruary 12, 2015.

(ix) The amount of N13.9 billion ($75 million) represents a Dollar Term Loan from Standard Bank granted in September2014 and is priced at Libor +3.50%. The facility of which interest is payable quarterly has a maturity date of April 2017.

(x) The amount of N8.9 billion ($50 million) represents a Dollar Term Loan from First Rand Bank granted in August 2014and is priced at Libor +3.50%. The facility of which interest is payable quarterly has a maturity date of August 2017.

(xi) The amount of N55.2 billion ($300 million) represents a syndicated facility of which Commerzbank AG is the FacilityAgent . The 2-year syndicated facility which was granted on December 30, 2014 is priced at Libor+3.20% with a maturitydate of December 30, 2016. Interest is payable quarterly.

For each borrowing balance, the outstanding amount payable to the lenders as disclosed in the footnotes, represents theprincipal amount outstanding as at the reporting date, while the amount reported on the statement of financial positioncomprises of the principal amount outstanding, the interest payable at the reporting date, as well as the effect of thecarrying the loans at amortised cost.

34. Debt Securities issued

Due to Euro bond holders 92,932 - 92,932 -

92,932 - 92,932 -

The amount of N92.9 billion ($500 million) represents the Eurobond issued by Zenith Bank Plc on April 22, 2014 with a maturitydate of April 22, 2019 and a yield of 6.50% .The rate of interest(coupon ) is 6.25% payable semi-annually with bullet repaymentof the Principal sum at maturity. The total amount is non-current.

The Group has not had any defaults of principal, interest or other breaches with repect to the debt securities during the yearended 31 Decmber 2014.

Classified as:Current - - - -Non-current 92,932 - 92,932 -

92,932 - 92,932 -

35. Liabilities classified as held for sale

Liabilities of disposal groupsClaims payable - 2,084 - -Current income tax - 1,405 - -Deferred income tax liabilities - 295 - -Other payables - 6,274 - -Liabilities on insurance contracts - 4,053 - -

- 14,111 - -

36. Derivative liabilitiesDerivative liabilities (see note 20) 6,073 - 6,073 -

6,073 - 6,073 -


ZENITH BANK PLC


Group Bank


Classified as: - - - -Current 6,073 - 6,073 -Non-current - - - -

6,073 - 6,073 -

The business of the entities classified as held for sale are discussed in Note 21(c).

37. Share capital

Authorised40,000,000,000 ordinary shares of 50k each(2013: 40,000,000,000) 20,000 20,000 20,000 20,000

Issued and fully paid 31,396,493,786 ordinary shares of 50k each(2013: 31,396,493,786) 15,698 15,698 15,698 15,698

There was no movement in the share capital account during the year.

38. Share premium, retained earnings and other reserves

(a) There was no movement in the Share premium account during the current and prior year.

Share premium 255,047 255,047 255,047 255,047

The nature and purpose of the reserves in equity are as follows:

(b) Share premium: Premiums from the issue of shares are reported in share premium.

(c) Retained earnings: Retained earnings comprise the undistributed profits from previous years which have not beenreclassified to the other reserves noted below.

(d) Statutory reserve: Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve.As stipulated by section 16(1) of the Bank and Other Financial Institutions Act of 1991 (amended), an appropriation of 30%of profit after tax is made if the statutory reserve is less than the paid-up share capital and 15% of profit after tax if thestatutory reserve is greater than the paid-up share capital.

(e) SMIEIS reserve: The SMIEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement thatall licensed banks set aside a portion of the profit after tax in a fund to be used to finance equity investments in qualifyingsmall and medium scale enterprises. Under the terms of the guideline (amended by CBN letter dated 11 July 2006), thecontributions will be 10% of profit after tax and shall continue after the first 5 years but banks’ contributions shall thereafterreduce to 5% of profit after tax. The small and medium scale industries equity investment scheme reserves are non-distributable. Transfer to this reserve is no longer mandatory.

(f) Revaluation reserve: Comprises fair value movements on equity instruments.

(g) Foreign currency translation reserve: Comprises exchange differences resulting from the translation to Naira of theresults and financial position of Group companies that have a functional currency other than Naira.

(h) Statutory reserve for credit risk: The Nigerian banking regulator requires the bank to create a reserve for the differencebetween impaired charge determined in line with the principles of IFRS and impaired charge determined in line with theprudential guidelines issued by the Central Bank of Nigeria (CBN). This reserve is not available for distribution toshareholders.


ZENITH BANK PLC


Group Bank


39. Pension contribution

In accordance with the provisions of the Pensions Reform Act 2004, the Bank and its subsidiaries commenced acontributory pension scheme in January 2005. For entities operating in Nigeria, the contribution by employees and theemploying entities are 2.5% and 15.5% respectively of the employees' basic salary, housing and transport allowances.Entities operating outside Nigeria contribute in line with the relevant pension laws in their jurisdictions. The contribution bythe group and the bank during the period were N 3.52 billion and N 3.15 billion respectively (2013: N 2.80 billion andN2.50 billion).

40. Personnel expenses

Compensation for the staff (excluding executive directors) are as follows:

Salaries and wages 55,689 47,974 51,610 45,328Other staff costs 13,132 9,175 13,089 9,035Pension contribution 3,499 2,803 3,149 2,501

72,320 59,952 67,848 56,864

(a) The average number of persons employed during the period by category:

Number Number Number NumberExecutive directors 10 8 4 4Management 510 468 452 455Non-management 6,758 6,825 5,903 6,156

7,278 7,301 6,359 6,615

The table below shows the number of employees (excluding Directors), whose earnings during the year, fell within theranges shown below:

Number Number Number NumberN300,001 - N2,000,000 721 841 376 769N2,000,001 - N2,800,000 118 324 - -N2,800,001 - N4,000,000 1,114 1,138 910 956N4,000,001 - N6,000,000 1,817 1,677 1,561 1,636N6,000,001 - N8,000,000 1,219 1,223 1,189 1,205N8,000,001 - N9,000,000 882 681 864 670N9,000,001 - and above 1,407 1,415 1,459 1,375

7,278 7,299 6,359 6,611

(b) Directors' emoluments

The remuneration paid directors to directors are as follows:

Fees and sitting allowances 279 233 174 165Executive compensation 343 421 245 258Retirement Benefit costs 8 21 6 6

630 675 425 429

Fees and other emoluments disclosed above include amounts paid to:

The chairman 15 23 15 23

The highest paid director 76 26 62 26


ZENITH BANK PLC


Group Bank


40. Personnel expenses (continued)

The number of directors who received fees and other emoluments (excluding pension contributions and reimbursableexpenses) in the following ranges was:

Number Number Number NumberN5,500,001 and above 35 15 8 7



Group Bank


41. Group subsidiaries and related party transactions

Parent:

Zenith Bank Plc (incorporated in Nigeria) is the ultimate parent company of the Group.

Subsidiaries:

Transactions between Zenith Bank Plc and its subsidiaries which are eliminated on consolidation are not separatelydisclosed in the consolidated financial statements. The Group's effective interests and investments in subsidiaries as at 31December 2014 are shown below.

Entity Effectiveholding

%

Nominal sharecapital held

Foreign / banking subsidiaries: Zenith Bank (Ghana) Limited %98.07 6,444Zenith Bank (UK) Limited %100.00 21,482Zenith Bank (Sierra Leone) Limited %99.99 2,059Zenith Bank (Gambia ) Limited %99.96 1,038Zenith Pensions Custodian Limited %99.00 1,980

Significant restrictions

The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other thanthose resulting from the supervisory frameworks within which banking subsidiaries operate. The supervisory frameworksrequire banking subsidiaries to keep certain levels of regulatory capital and liquid assets, limit their exposure to other partsof the Group and comply with other ratios. See notes 3.4, 3.5 and 4.4.3 for disclosures on liquidity, capital adequacy, andcredit risk reserve requirements respectively. The carrying amounts of banking subsidiaries' assets and liabilities areN501.70 billion and N443.73 billion respectively (2013: N371.77 billion and N333.18 billion respectively).

Non controlling interest in subsidiaries

The Group does not have any subsidiary that has material non controlling interest.

Key management personnel

Key management personnel is defined as the Group's executive, including their close members of family and any entityover which they exercise control. Close members of family are those family members who may be expected to influence, orbe influenced by that individual in their dealings with the Group.

Key management compensation Salaries and other short-term benefits 414 534 245 258Retirement benefit cost / defined contribution 11 10 6 6Loans and advancesAt start of the year 888 1,159 821 1,090Granted during the year 6 83 - 83Repayment during the year (107) (354) (86) (352)

At end of of the year 787 888 735 821

Interest earned 33 26 29 25

Loans to key management personnel include mortgage loans and other personal loans which are given under terms thatare no more favourable than those given to other staff. No impairment has been recognised in respect of loans granted tokey management (2013: Nil). Mortgage loans amounting to N520 million (2013: N888 million) are secured by the underlyingassets. All other loans are unsecured.

2014Name of company Relationship Loans Deposits Interest

receivedInterest paid

Visafone Communication Limited Commondirectorship

345 193 52 17

Quantum Fund Management Commondirectorship

8,741 12 1,049 7

At end of of the year 9,086 205 1,101 24



Group Bank


2013Name of company Relationship Loans Deposits Interest

receivedInterest paid

Visafone Comm ltd Commonsignificantshareholder

2,640 21 396 21

Quantum Fund Management Commonsignificantshareholder

7,978 82 957 1

At end of of the year 10,618 103 1,353 22

Interest charged on loans to related parties and interest and other fees paid to related parties are similar to what would becharged in an arms' length transaction. Loans granted to related parties are secured over real estate and other assets ofthe respective borrowers. No impairment has been recognised in respect of loans granted to related parties (2013: Nil).

During the year, Zenith Bank Plc paid N 804 million as insurance premium to Zenith General Insurance Limited (2013: N819 million). Also, the Bank paid a total of N 364 million to Visafone Communication Limited for provision oftelecommunication services (2013:N 352 million). This expenses were reported as operating expenses.

42. Contingent liabilities and commitments

(a) Legal proceedings

The Group is presently involved in 107 (2013:115) litigation suits in the ordinary course of business. The total amountclaimed in the cases against the Group is estimated at N6.15 billion (2013: N3.38 billion). The actions are being contestedand the Directors are of the opinion that none of the aforementioned cases is likely to have a material adverse effect on theGroup and are not aware of any other pending or threatened claims and litigations.

(b) Capital commitments

At the balance sheet date, the Group had capital commitments amounting to N3.22 billion (2013: N2.37 billion) in respect ofauthorized and contracted capital projects.

(c) Confirmed credits and other obligations on behalf of customers

In the normal course of business the Group is a party to financial instruments with off-balance sheet risk. These instrumentsare issued to meet the credit and other financial requirements of customers. The contractual amounts of the off-balancesheet financial instruments are:

Group Group Bank Bank 2014 2013 2014 2013

Performance bonds and guarantees 627,458 648,847 603,520 632,167Usance 156,791 167,520 156,791 147,067Letters of credit 216,634 170,516 156,511 153,033Pension Funds (See Note (below)) 1,732,565 1,469,865 1,732,565 1,469,865

2,733,448 2,456,748 2,649,387 2,402,132

The transaction related performance bonds and guarantees are, generally, short-term commitments to third parties whichare not directly dependent on the customer's creditworthiness. As at 31 December 2014, performance bonds andguarantees worth N50.4 billion (2013: N47.3 billion) are secured by cash while others are otherwise secured.

Usance and Letters of credit are agreements to lend to a customer in the future, subject to certain conditions. Suchcommitments are either made for a fixed period, or have no specific maturity dates, but are cancellable by the Group (aslender) subject to notice requirements. These Letters of credit are provided at market-related interest rates and cannot besettled net in cash. Usance and letters of credit are secured by different types of collaterals similar to those accepted foractual credit facilities.

The amount of N1,732.57 billion (2013: N1,469.87 billion) represents the full amount of the Group's guarantee for theassets held by its subsidiary, Zenith Pensions Custodian Limited under the latter's custodial business as required by theNational Pensions Commission of Nigeria.


ZENITH BANK PLC


Group Bank


43. Dividend per share

Group Group Bank Bank 2014 2013 2014 2013

Dividend proposed 54,943 54,943 54,943 54,943Number of shares in issue and ranking for dividend 31,396 31,396 31,396 31,396

Proposed dividend paid per share k175 k175 k175 175

The Board of Directors, pursuant to the powers vested in it by the provisions of section 379 of the Companies and AlliedMatters Act of Nigeria, Cap C20 LFN 2004, proposed a dividend of N1.75 per share (2013: N1.75 per share) from theretained earnings account as at 31 December 2014. This is subject to approval by shareholders at the next Annual GeneralMeeting.

If the proposed dividend is approved by the shareholders, the Bank will be liable to pay additional corporate tax estimated atN16.48 billion, which represents the difference between the tax liability calculated at 30% of the dividend approved and theminimum tax charge reported in the statement of comprehensive income for year ended 31 December 2014.

The number of shares in issue and ranking for dividend represents the outstanding number of shares as at 31 December2014 and 31 December 2013 respectively.

Payment of dividends to shareholders is subject to withholding tax at a rate of 10% in the hand of recipients.

44. Cash and cash equivalents

For the purposes of the statement of cash flow, cash and cash equivalents include cash and non-restricted balances withcentral banks, treasury bills maturing within three months, operating account balances with other banks, amounts due fromother banks.

Cash and cash balances with central bank (lessmandatory reserve deposits in Note 16)

244,434 255,158 220,216 239,167

Treasury bills(maturing within three months)(Note 17) 214,721 354,834 181,498 352,786Due from other banks 506,568 256,729 470,139 249,524

965,723 866,721 871,853 841,477

45. Compliance with banking regulations

During the year, the Bank paid the following fines and penalties;

S/N Descriptons Amount Paidin (N)

1 Non disclosure of date of last lodgement on credit print out (N2 million), appointment ofa DGM acting chief compliance officer (N2 million), Incomplete reporting of alltransactions of politically exposed persons (N2 million).

6,000,000.00

2 Incomplete reporting of International Funds transfer in excess of USD 10,000 (N2million), incomplete reporting of some currency transactions reports (N2M), laterendition os suspicious transaction report (N4 million).

8,000,000.00

2 Inability to fully implement some External Auditors recommendation (N2 million),misclassification of some Public Sector Deposit (N32 million).

34,000,000.00

48,000,000.00


ZENITH BANK PLC


Group Bank


46. Events after the reporting period

No significant event that requires special disclosure occured between the reporting date and the date when the financialstatements were issued.

47. Comparatives

Certain prior year amounts under net gains on financial instruments measured at fair value through profit of loss were restatedto trading income, fees and commission inome, interest and similar income and other income, to correspond to current yearpresentation.

(i) Net gains on financial instruments measured at fair value

Amounts previously reported - 21,787 - 19,580Reclassified to trading income (see note (ii) below) - (5,105) - (5,077)Reclassified to fees and commission income (see note(iii) below) - (2,458) - (2,458)Reclassified to interest income (see note (iv) below) - (10,479) - (10,479)Reclassified to other income (see note (v) below) - (3,745) - (1,566)

Amount as restated - - - -

(ii)Trading income

Amounts previously reported - - - -Reclassified from net gains on financial instrumentsmeasured at fair value (see note (i) above)

- 5,105 - 5,077

Amount as restated - 5,105 - 5,077

(iii)Fees and commission income

Amount previously reported - 52,550 - 47,116

Reclassified from net gains on financial instrumentsmeasured at fair value (see note (i) above)

- 2,458 - 2,458


- - - -

(iv)Interest and similar income

Amount previously reported - 260,059 - 243,852


- 10,479 - 10,479


(v)Other income

Amount previously reported - 754 - 727


- 3,745 - 1,566

Amount as restated 4,499 - 2,293


ZENITH BANK PLC

Value Added StatementIn millions of Naira 2014 2014 2013 2013

% %

Group

Gross income 403,343 351,470

Interest expense - Local (91,722) (60,791) - Foreign (15,197) (10,005)

296,424 280,674

Impairment charge for credit losses (13,064) (11,176)283,360 269,498

Bought-in materials and services - Local (78,835) (84,117) - Foreign (2,594) (4,115)

Value added 201,931 100 181,266 100

Distribution

EmployeesSalaries and benefits 72,320 36 59,952 33

GovernmentIncome tax 20,341 10 15,279 8

Retained in the GroupReplacement of property and equipment / intangible assets 9,815 5 10,717 6To pay proposed dividend 54,943 27 54,943 30Profit for the year (including statutory, small scale industry, and non-controling interest)

44,512 22 40,375 22

Total Value Distributed 201,931 100 181,266 100

Value added represents the additional wealth which the company has been able to create by its own and employees efforts.


ZENITH BANK PLC

Value Added StatementIn millions of Naira 2014 2013

% %

Bank

Gross income 372,015 311,275

Interest expense - Local (96,845) (67,013) - Foreign (2,594) (1,458)

272,576 242,804Impairment charge for credit losses (12,392) (9,907)

260,184 232,897Bought-in materials and services - Local (72,789) (70,356) - Foreign (2,577) (1,710)

Value added 184,818 100 160,831 100

Distribution

EmployeesSalaries and benefits 67,848 37 56,864 35

GovernmentIncome tax 15,370 8 10,694 7

Retained in the GroupReplacement of property and equipment / intangible assets 9,121 5 9,859 6To pay proposed dividend 54,943 30 54,943 34Profit for the year (including statutory, and small scale industry) 37,536 20 28,471 18

Total Value Distributed 184,818 100 160,831 100

Value added represents the additional wealth which the company has been able to create by its own and employees efforts.


ZENITH BANK PLC

Five Year Financial SummaryIn millions of Naira 2014 2013 2012 2011 2010

Group

Statement of Financial Position

AssetsCash and balances with central banks 752,580 603,851 332,515 223,187 141,724

Treasury bills 295,397 579,511 669,164 510,738 298,858

Assets pledged as collateral 151,746 6,930 - - -

Due from other banks 506,568 256,729 182,020 234,521 399,478

Derivative assets 17,408 2,681 - - -

Loans and advances 1,729,507 1,251,355 989,814 893,834 754,024

Assets classified as held for sale - 30,454 31,943 52,482 -

Reinsurance assets and insurance receivables - - - - 1,121

Investment securities 200,079 303,125 299,343 308,231 211,804

Investments in associates 302 165 420 1,756 2,443

Deferred tax assets 6,449 749 432 186 1,657

Other assets 21,455 36,238 28,665 25,510 20,457

Investment property - - - 7,114 7,342

Property and equipment 71,571 69,410 68,782 68,366 66,585

Intangible assets 2,202 1,935 1,406 770 827

Total assets 3,755,264 3,143,133 2,604,504 2,326,695 1,906,320

LiabilitiesCustomers deposits 2,537,311 2,276,755 1,929,244 1,655,458 1,319,762

Claims payable - - - - 218

Derivative liabilities 6,073 - - - -

Current tax payable 10,042 7,017 6,577 13,348 3,735

Deferred income tax liabilities - 678 5,584 10,742 10,348

Other liabilities 289,858 215,643 117,355 152,836 143,373

Liabilities on insurance contracts - - - - 2,287

On-lending facilities 68,344 59,528 56,066 49,370 26,049

Borrowings 198,066 60,150 15,138 21,070 28,358

Liabilities classified as held for sale - 14,111 11,584 29,603 -

Debt securities issued 92,932 - - - -

Total liabilities 3,202,626 2,633,882 2,141,548 1,932,427 1,534,130

Net assets 552,638 509,251 462,956 394,268 372,190

EquityShare capital 15,698 15,698 15,698 15,698 15,698

Share premium 255,047 255,047 255,047 255,047 255,047

Retained earnings 183,396 161,144 130,153 75,072 64,826

Other reserves 97,945 73,347 58,786 45,765 34,202

Attributable to equity holders of the parent 552,086 505,236 459,684 391,582 369,773

Non-controlling interest 552 4,015 3,272 2,686 2,417

Total shareholders' equity 552,638 509,251 462,956 394,268 372,190


ZENITH BANK PLC


STATEMENT OF COMPREHENSIVE INCOMEGross earnings 403,343 351,470 307,082 243,948 193,286

Share of profit / (loss) of associates 138 118 23 45 27

Interest expense (106,919) (70,796) (64,561) (34,906) (35,719)

Operating and direct expenses (163,702) (159,019) (130,999) (124,256) (102,503)

Impairment charge for credit losses (13,064) (11,176) (9,445) (17,391) (4,977)

Profit before taxation 119,796 110,597 102,100 67,440 50,114Income tax (20,341) (15,279) (1,419) (18,736) (12,291)

Profit after tax 99,455 95,318 100,681 48,704 37,823Foreign currency translation differences 3,282 (2,070) (2,424) (421) (507)

Fair value movements on equity instruments 2,549 324 297 705 210

Related tax - 890 (91) (212) (63)

Effective portion of changes in fair value of cashflow hedges

(2,771) 2,771 - - -

Related tax 760 (760) - - -

3,820 1,155 (2,218) 72 (360)

Total comprehensive income 103,275 96,473 98,463 48,776 37,463


ZENITH BANK PLC


Bank

Statement of Financial Position

AssetsCash and balances with central banks 728,291 587,793 313,546 211,098 130,604

Treasury bills 253,414 565,668 647,474 494,253 287,981

Assets plegeds as collateral 151,746 6,930 - - -

Due from other banks 470,139 249,524 203,791 246,364 374,604

Derivative assets 16,896 - - - -

Loans and advances 1,580,250 1,126,559 895,354 707,586 677,760

Investment securities 92,832 212,523 256,905 267,050 -

Investments in subsidiaries 33,003 24,375 24,375 19,345 172,180

Investments in associates 90 90 463 1,822 37,134

Deferred tax assets 6,333 - - - 2,509

Other assets 19,393 31,415 16,814 17,616 -

Assets classified as held for sale - 4,749 10,338 10,838 15,402

Investment property - - - 7,114 6,895

Property, plant and equipment 69,531 67,364 66,651 65,877 63,000

Intangible assets 1,901 1,703 1,175 661 784

Total assets 3,423,819 2,878,693 2,436,886 2,049,624 1,768,853

LiabilitiesCustomers deposits 2,265,262 2,079,862 1,802,008 1,577,290 1,290,014

Derivative liabilities 6,073 - - - -

Current tax payable 7,709 5,266 5,071 11,934 1,010

Deferred income tax liabilities - - 5,573 10,732 9,869

Other liabilities 272,726 201,265 115,027 126,660 86,470

On-lending facilities 68,344 59,528 56,066 49,370 26,049

Borrowings 198,066 60,150 15,138 21,070 28,358

Debt securities issued 92,932 - - - -

Total liabilities 2,911,112 2,406,071 1,998,883 1,797,056 1,441,770

Net assets 512,707 472,622 438,003 252,568 327,083

EquityShare capital 15,698 15,698 15,698 15,698 15,698

Share premium 255,047 255,047 255,047 255,047 255,047

Retained earnings 150,342 126,678 106,010 55,028 51,769

Other reserves 91,620 75,199 61,248 46,244 34,395

Attributable to equity holders of the parent 512,707 472,622 438,003 372,017 356,909

Total shareholders' equity 512,707 472,622 438,003 372,017 356,909

STATEMENT OF COMPREHENSIVE INCOME

Gross earnings 372,015 311,275 279,042 214,980 168,415

Interest expense (99,439) (68,471) (65,352) (33,407) (34,522)

Operating and direct expenses (152,335) (138,789) (111,644) (108,529) (89,107)

Impairment charge for credit losses (12,392) (9,907) (7,998) (15,900) (3,317)

Profit before tax 107,849 94,108 94,048 57,144 41,469Income tax (15,370) (10,694) 1,755 (15,843) (9,164)

Profit after tax 92,479 83,414 95,803 41,301 32,305Other comprehensive incomeFair value movements on equity instruments 2,549 549 15 705 210

Tax effect of equity instruments at fair value - 890 (5) (211) (63)

2,549 1,439 10 494 147

Total comprehensive income 95,028 84,853 95,813 41,795 32,452
